Consumer spending slows down
Despite retail sales having fallen sharply in the last three months up to October, retailers remain optimistic and expect a modest growth leading up to Christmas.
The latest CBI Monthly Distributive Trades Survey shows negative results regarding sales volume in August, September and October, but retailers keep their hopes high as Christmas approaches.
British consumers have not been using their credit cards much lately. Despite the fact that 24% of companies saw their sales volume rise compared to a year ago, 36% reported an average fall of 11% this October.
Sales sectors that have lost the most ground in terms of sales include footwear & leather (-98%), hardware & DIY (-75%) and clothing (-39%). In contrast, the grocery and furniture/carpets sectors saw their sales volumes increase on a year ago (+11% and +34% respectively).
Christmas pick up
"Family budgets continue to be stretched because of a combination of high inflation, low wage growth and soaring unemployment, so consumer confidence is severely dented,” said Ian McCafferty, CBI Chief Economic Adviser.
The CBI report indicates that sales volumes are expected to increase by 4% in the next month. "High street sales remain difficult but the decline has stabilised, and retailers expect there to be some very modest growth next month in the build-up to Christmas,” suggested McCafferty.
These predictions are very likely to come true considering that recent research from a leading comparison site revealed that general Christmas costs have risen by 15% since 2009. Because of this, 55% of UK consumers suggested their Christmas holiday will be much tighter this year.
60% of British consumers are already worrying about the extra spending that Christmas represents and a third of them are planning to make severe cutbacks. The study predicts that Brits might have to rely on credit cards to afford the fast approaching holiday season.