British consumer spending lost momentum last month after a bounce at the start of the year, despite households’ rising confidence in their personal finances and the broader economy, surveys of retailers and consumers showed on Tuesday.
The British Retail Consortium (BRC) said sales at its member stores – mostly large retail chains – rose by 1.1% year-on-year in February, slowing from January’s robust 2.6% growth which post-Christmas discounts helped.
BRC chief executive Helen Dickinson said the weaker growth reflected low demand for spring fashions as February’s weather remained wintry and repeated complaints about higher employer social security and packaging taxes that take effect next month.
Dickinson said, “The industry is already doing all it can to absorb existing costs, but they will be left with little choice but to increase prices or reduce investment in jobs and shops, or both.”
Upcoming government plans to make it harder to dismiss new employees risked discouraging typical retailers from taking on entry-level staff and should focus instead on existing bad practice by unscrupulous employers, she added.
Spending
Separate data from Barclays showed that consumer spending – which covers a wide range of goods and services than retail sales – rose by 1.0% in February, slowing from January’s 1.9%.
However, Barclays’ survey measure of households’ confidence in their own finances rose to its highest since records began in 2015 at 75% – though this partly reflected efforts to save.
Confidence in the wider economy also rose but remained much lower at 25%.
Barclays spending data was based on debit and credit card spending between 25 January and 21 February, while the consumer sentiment data was based on a survey of 2,000 people conducted from 21-26 February.
The BRC data covered sales made between 2 February and 1 March.
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