UK retail sales growth cooled in September as concerns over inflation and potential tax increases in the upcoming autumn budget weighed on consumer spending, according to industry data. The British Retail Consortium (BRC) reported that total sales rose 2.3% year-on-year, down from 3.1% in August and below the latest inflation rate of 3.8%.
Separate figures from Barclays showed card spending fell 0.7% year-on-year in September, with nearly half of consumers surveyed making changes to their finances in anticipation of Chancellor Rachel Reeves's 26 November budget. One in three consumers were building a savings buffer, the bank said.
Helen Dickinson, chief executive of the BRC, noted that the looming budget and milder weather had affected spending. “Rising inflation and a potentially taxing budget are weighing on the minds of many households planning their Christmas spending,” she said. Food sales grew 4.3% year-on-year, driven by rising grocery prices, while non-food sales rose just 0.7%.
Business leaders have warned that higher taxes on companies would likely be passed on to consumers through price rises. The British Chambers of Commerce urged the chancellor to rule out business tax increases, with director general Shevaun Haviland calling the budget a “make-or-break” moment for the economy. “Right now, many firms feel drained,” she said.
Despite the cautious outlook, consumer confidence in households' ability to live within their means reached a four-year high of 78%, according to Barclays. However, the bank warned that households remained cautious amid the prospect of higher inflation and tax increases.
