As fuel and food prices soar, consumers tighten retail spending

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As UK consumers feel the real impact of the rising cost of living, the latest data from the Office for National Statistics (ONS) reveals that the retail sector has felt the impact, figures sales fell 0.3% last month.

The drop in sales comes at a time when British Prime Minister Boris Johnson has admitted he and his government need to do more to deal with the current financial strain on households.

Last week, Chancellor of the Exchequer Rishi Sunak came under fire for not doing enough in his actions outlined in the spring statement.

Sunak announced measures that would amount to “a £6 billion personal tax cut for 30 million people across the UK, a tax cut for employees worth over £330 sterling per year”. This included a reduction in fuel taxes and a promise of income tax relief, but not before 2024, when the UK economy is believed to be more robust.

Johnson remarked that the reality of the current cost-of-living crisis was “the most important thing we need to address.”

As UK petrol and diesel prices hit record highs, shoppers are focusing on essential purchases and retailers have felt the impact. Throughout March, non-store retail sales fell 4.8% from the previous month which saw growth of 4%.

Food sales volume also fell 0.2%, but clothing sales rose 13.2%, suggesting consumer demand is still pent up.

It was online retail that saw sales fall 27.8% as shoppers appeared to use brick-and-mortar stores more – a sure sign that the high street is indeed not dead, but evolving.

It is clear that the year ahead will remain challenging as the reality of the rising cost of living continues to constrain spending.

The Office for Budget Responsibility, set up to provide independent analysis of UK public finances, has warned that living standards will face the biggest drop in a single year since records began in the 1950s.

The impact will certainly slow any signs of a post-Covid financial recovery and retailers will rely on promotion to offset the pressure. New pressures are looming on the horizon with a continued rise in energy prices and inflation which has already increased by 6.2% for the year to February and could rise to 8% in the spring according to the Bank of England.

As retailers prepare for the Easter holiday, the UK’s second biggest annual sales occasion, it will be with eager anticipation to see how consumers react. It’s the first Easter since 2019 without Covid restrictions allowing families to celebrate together, but many will be starkly aware of the tight financial situation and the stark warning that things could get worse.

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