UK retail growth slowest in 15 months
UK shoppers remained cautious about spending in January, as high inflation and borrowing costs continue to weigh on household budgets.
The British Retail Consortium said consumer spending increased by 1.4% in January YoY on a like for like basis, below a 1.7% rise in December, marking the slowest growth in 15 months. Meanwhile, separate figures from Barclays paint a different picture. Jack Meaning, chief UK economist at Barclays, is noticing an improvement in consumer confidence, and a positive message for the UK outlook in 2024. Barclays customers spent 3.1% more on debit and credit cards in January than a year earlier, It is still below the most recent rate of inflation, but growth accelerated after a 2.3% rise in December, and it marks the strongest rise in online shopping in two years.
(AI Video Summary)
The British Retail Consortium
UK shoppers are being cautious with their spending due to high inflation and borrowing costs, which is creating a difficult situation for their household budgets. According to the British Retail Consortium, consumer spending only increased by 1.4% in January compared to the previous year, the slowest growth in 15 months. This decline in growth is a cause for concern. However, Barclaycard reported that their customers spent 3.1% more on debit and credit cards than the previous year, which is an improvement from December's 2.3% rise. This increase in online shopping is a positive development, but it still falls below inflation.
The FTSE 350 General Retailers Index
The chief economist at Barclays is optimistic about consumer confidence and has a positive outlook for the UK in 2024. Unfortunately, the FTSE 350 General Retailers Index suggests a potential decline in the retail sector. It recently experienced a significant downward trend, indicating a bearish market sentiment. Although there has been some buying activity since then, it is not expected to last long. Retailers face challenges as they have to lower prices to attract customers, which negatively affects their profit margins.
The Bank of England
The future of the retail industry heavily relies on whether the Bank of England will decrease interest rates in the near future. However, it seems unlikely that this will happen. If interest rates remain high, it will continue to put pressure on shoppers and their ability to spend. On the other hand, if interest rates decrease, it could potentially stimulate consumer spending and provide a boost to the retail sector.
In summary, UK shoppers are being cautious with their spending due to high inflation and borrowing costs. Consumer spending has experienced slow growth, and the retail sector is facing challenges. The future of the industry depends on the Bank of England's decision regarding interest rates.
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