The British newspaper, The Guardian, said that retailers in Britain are planning to cut jobs, with the decline in spending and the decline in commercial activity exacerbating the lowest level due to high interest rates and their impact on household budgets.
While the employers’ organization said that retailers did not see any decline, and they reduced orders with suppliers.
“Retail sales in August fell at their fastest pace in more than two years, peaking in a summer many retailers would prefer to forget,” said Martin Sartorius, chief economist at the Confederation of British Industry.
“On the back of rising interest rates and weaker demand, retailers expect investment cuts over the next year, while employment is expected to decline again next month,” he added.
Retail sales are less than half of total consumer spending
Retail sales account for less than half of all consumer spending because they exclude items such as dining out, hotel stays and car purchases.
But while there are some indications of a shift in consumer behavior towards spending on experiments, the steady decline in retail spending detected by the BoE’s Distributive Trade Survey will still be seen by economists as evidence of the impact of the Bank of England’s 14th interest rate. Increases since December 2021.
Hot weather affects consumption
Bad summer weather has also affected sectors such as apparel and footwear, as retailers struggle to turn over summer inventories.
The survey included asking retailers whether sales volumes had increased, decreased, or unchanged from last year, and found that the balance of those who recorded an improvement in business compared to those who recorded a decrease amounted to -44 percentage points in August, and this was weaker than the deficit that amounted to – 25 points recorded in July, far less than the +5 points recorded in April.
While a recent survey by the British Retail Confederation lobby group found retailers offering deep discounts to attract reluctant consumers, the Confederation of British Industry said there was only tentative evidence of lower prices.
