Retail sales in the UK took the full brunt of inflation in June and are seeing volumes fall at a pace reminiscent of the dark hours of the pandemic, the BRC traders’ federation warned on Tuesday.
“Sales volumes are falling at a pace not seen since the height of the pandemic, as inflation continues to hit and households cut spending,” said Helen Dickinson, director. general of the RBC, in a press release.
UK price inflation hit 9.1% year on year in May, the highest inflation rate among G7 countries, and could top 11% by the end of the year, adding to the severe cost of living crisis for the British.
Households have cut significantly in their optional expenditure, first and foremost household appliances and purchases for the home, and now choose the cheapest brands as a priority for mandatory purchases, food and others, according to the BRC.
Sales, not adjusted for inflation, fell by 1% in June, against an increase of 10.4% a year earlier.
But given the historically high level of inflation, this reflects ‘a much larger drop in volumes’, the BRC statement said.
Traders are now caught in the crossfire between ‘significantly rising costs in their supply chains’ on the one hand and ‘protecting their customers from price spikes’ on the other, Ms Dickinson added. .
She calls on the government to be creative in order to “relieve some of this pressure”, in particular by reducing certain taxes weighing on companies.
But if the conservatives, in the middle of the campaign to replace resigning Prime Minister Boris Johnson, compete with promises of tax cuts, these announcements are greeted with skepticism in business circles, for lack of being supported by real strategies.
The British economy slowed down in May as in June according to the PMI Flash Composite index of S&P Global and CIPS, considered a barometer of growth, which noted at the end of June that “demand has almost stalled”.
The British Statistical Institute (ONS) is due to release the May growth figure on Wednesday.
/ATS