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Fears grow for festive shopping season as UK retail sales soften

Retail sales eased in September, data showed on Tuesday, as the UK’s post-pandemic recovery continued to lose momentum.
In the five weeks to 2 October 2021, sales decreased 0.6% on a like-for-like basis against September 2020, when they had jumped 6.1%, according to the latest BRC-KPMG Retail Sales Monitor.

On a total basis, sales increased by 0.6% compared to growth of 5.6% in September 2020. That remains below both the three-month average, for growth of 3.1%, and the 12-month average, for growth 9.8%.

Underlying retail sales were ahead 5.8%, however, when compared to September 2019.

In the three months to September, food sales rose 2.3% on a total basis and by 1.7% on an underlying basis. During the same period, non-food retail sales increased by 3.8% year-on-year, or by 1.6% on a like-for-like basis.

The UK economy surged earlier in the year, as the country emerged from lockdown and consumer spending and business activity jumped. But in recent months the recovery has been hampered by a number of factors, including supply chain difficulties, higher prices and staff shortages. Consumer confidence has also been hit by growing inflationary pressures.

After hitting a high of 51.1% growth in April, total retail sales growth has eased every month since, from 6.4% in July to 3.0% in August and 0.6% last month, and concerns are growing that the all-important Christmas season will struggle.

Helen Dickinson, chief executive of the British Retail Consortium, said: “September saw the slowest retail sales growth since January, when the UK was in lockdown. There are signs that consumer confidence is being hit as the fuel shortages, combined with wetter weather, had an impact in the second half of the month.

“An uncertain backdrop and slower growth means the fourth quarter looks challenging, as the economic recovery is dependent on strong retail sales during the festive season. Retailers, farmers and manufacturers are already making preparations to ensure enough food and festive gifts move through the supply chain in time for Christmas. Unfortunately the lack of drivers is hindering these preparations, and increasing costs, which will eventually be reflected in higher prices.”

Paul Martin, UK head of retail at KPMG, said the slowdown had continued despite September traditionally being a strong month for retailers.

“The high street saw less than 1% growth, with sales falling back across every category other than apparel and beauty, while online sales fell by 2.2% compared to September 2020, although online penetration rates remained significantly above pre-pandemic levels,” he said.

“As we run into the crucial Christmas shopping period, retailers continue to face staffing pressures and supply chain issues, with challenges getting product into the UK and getting goods into customers’ hands.”

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