Excessive meals inflation pushed up UK grocery spending final month, prompting many shoppers to chop again on discretionary purchases, in keeping with retail sector knowledge printed on Tuesday.
Figures from commerce physique the British Retail Consortium and KPMG, the advisory providers agency, confirmed that UK meals gross sales elevated by an annual fee of 9.6 per cent in Might, properly above the 12-month common of 6.9 per cent.
The determine was additionally greater than double the general retail development fee of three.9 per cent, the slowest in six months, highlighting how rising meals costs at the moment are the primary driver of total inflation.
Might’s tempo of total retail spending was dragged down by non-food gross sales, which remained largely flat at 0.7 per cent. BRC knowledge will not be corrected for the tempo of worth modifications, suggesting that buyers purchased fewer items than in Might 2022.
Paul Martin, UK head of retail at KPMG, stated the grocery sector was the “quickest rising a part of the buyer pockets”, which meant that buyers had been “having to spend extra . . . within the one space that’s getting disproportionately dearer”.
UK inflation declined less than expected between March and April, from 10.1 per cent to eight.7 per cent, in keeping with official knowledge printed final month. In April, meals costs rose at an annual fee of 19.1 per cent, solely marginally down from a 45-year excessive of 19.2 per cent in March.
Martin added that retailers would “be hoping that inflation ranges within the wider economic system proceed to maneuver in the appropriate course with the intention to increase much-needed client confidence”.
Separate knowledge from Barclays, which displays nearly half of all UK credit score and debit card transactions, additionally confirmed fast-rising grocery store spending, up 9.4 per cent in Might. Along with excessive meals inflation, the financial institution attributed the rise in grocery spending to events to mark the Coronation financial institution vacation weekend and Eurovision Track Contest.
Spending at pubs and on takeaway meals additionally continued to carry out properly, posting rises of 6.4 per cent and 13 per cent. However expenditure in eating places and on furnishings and electronics all contracted in contrast with the 12 months earlier than, with purchases of family items and clothes down 4.2 per cent and 5.1 per cent respectively in contrast with Might 2022.
General client spending rose solely 3.6 per cent, in keeping with Barclays, properly beneath the speed of inflation and down from 4.3 per cent in April. Esme Harwood, director at Barclays, stated many shoppers had been “having to forgo discretionary purchases to offset rising meals costs, with clothes and eating places most impacted”.
In the meantime, spending on gasoline fell 10.7 per cent, the financial institution stated, reflecting the decline in power prices since Might final 12 months, when fuel and petrol costs soared after Russia’s full-scale invasion of Ukraine.
Silvia Ardagna, head of European economics analysis at Barclays, stated the drop had helped the UK keep away from a technical recession — outlined as two consecutive quarters of financial contraction. However she added that “the forward-looking outlook stays one by which the economic system is prone to stagnate”.