UK retail sales growth cooled in September as concerns over inflation and anticipated tax rises in the upcoming autumn budget weighed on consumer spending, according to industry data.
The British Retail Consortium (BRC) reported total sales rose 2.3% year-on-year in September, down from 3.1% growth in August and below the latest inflation rate of 3.8%. Food sales increased 4.3%, driven largely by rising grocery prices, while non-food sales grew just 0.7%, below the 12-month average of 0.9%.
Separate figures from Barclays showed card spending fell 0.7% year-on-year in September, following 0.5% growth in August. The bank noted that nearly half of consumers surveyed were adjusting their finances ahead of Chancellor Rachel Reeves's 26 November budget, with one in three building savings. Essential spending dropped 2.6%, while discretionary spending growth slowed to 0.2%.
Helen Dickinson, chief executive of the BRC, said: 'Rising inflation and a potentially taxing budget are weighing on the minds of many households planning their Christmas spending.' Linda Ellett of KPMG added that non-food sales growth remained 'meagre' at 1.2% on average, as consumers stayed cautious.
Business groups have warned that tax increases in the budget could be passed on to consumers through higher prices. The British Chambers of Commerce urged the chancellor to rule out business tax rises, with director general Shevaun Haviland calling the budget a 'make-or-break' moment for the economy.
