UK retail sales growth cooled in September as concerns over inflation and expected tax rises in the upcoming autumn budget weighed on consumers, according to industry data. The British Retail Consortium (BRC) reported 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, following 0.5% growth in August. The bank noted that nearly half of consumers surveyed were adjusting their finances ahead of the 26 November budget, with one in three building a savings buffer. Consumer confidence in living within means reached a four-year high of 78%, but caution persisted.
Food sales increased 4.3% year on year, driven by rising grocery prices, while non-food sales grew just 0.7%, as milder weather deterred autumn clothing purchases. Spending on electrical goods, including the new iPhone and smartwatch, propped up non-food sales. Linda Ellett of KPMG described non-food growth as 'meagre' at 1.2% on average.
Business leaders warned that any tax rises in the budget would likely be passed on to consumers through higher prices. The British Chambers of Commerce urged Chancellor Rachel Reeves to rule out business tax increases, citing drained company finances. Shevaun Haviland of the BCC called the budget a 'make-or-break' moment for the UK economy.
