Official data released today shows that retail sales dropped less than was previously forecasted for August, heartening news in for a country where most citizens feel pessimistic about the road to economic recovery.
The trend for spending continues to remain flat, however, and a rise in retail sales is not predicted for September. This comes as consumers are pulling back on spending while uncertainty about employment and wage cuts become commonplace for workers.
The effect of tight household budgets can be seen throughout the retail sector, as even automotive fuel — often seen as a ‘necessity’ and therefore recession proof – dropped 0.2% in August. Sales volumes were the weakest since December 2010. Not counting fuel, retail sales both on the month and on the year fell by 0.1% in August.
This comes as no surprise, as Britons on the whole have suffered an income drop not seen in 30 years and are absolutely forced to cut spending. Government spending cuts have affected thousands of households and British consumer morale is reportedly at its weakest since the height of the recession.
The Office for National Statistics reported that we must not forget the riots, which undoubtedly played a part in affecting retail sales but the specific effects of which are difficult for the ONS to calculate. While some retailers suffered as a result of having to close their stores, others picked up businesses when consumers had to adjust their shopping habits during the riots.
Though wages have dropped drastically, the Office for National Statistics calculates that retail prices are 4.7% higher than they were just a year ago, making this the highest retail price inflation in 3 years, since July 2008. Clothing and shoes had the biggest hike in price since 1991.
Primark reported that it had taken a hit from having to start sales on its discount apparel earlier than normal, and drop prices more than ever before. As UK citizens are staying away from buying consumer electronics, Argos reported a 9% drop in sales. Even the well-to-do John Lewis chain of stores reported an 18% drop due to discounting.