Daily Management Review

Britons Are Cutting Back On Buying As A Result Of The Cost-Of-Living Constraint


Britons Are Cutting Back On Buying As A Result Of The Cost-Of-Living Constraint
In the face of rapidly rising inflation, British consumers cut back on purchasing in May, and a measure of their confidence fell to a new low this month, according to data that highlighted the magnitude of the cost-of-living crunch.
The Office for National Statistics reported on Friday that sales volumes decreased 0.5 per cent month on month in May, which was somewhat less than the 0.7 per cent drop predicted by economists polled by Reuters.
However, following an annual assessment of its seasonal adjustments methodology, the ONS reduced its estimate for month-on-month sales volume growth in April to 0.4 per cent from 1.4 per cent previously reported.
According to Heather Bovill, ONS deputy director for surveys and economic indicators, the drop in May was caused by lower food sales.
"Feedback from supermarkets suggested customers were spending less on their food shop, because of the rising cost of living," she said.
Earlier on Friday, the GfK poll, Britain's longest-running barometer of consumer confidence, plummeted to its lowest level since records began in 1974. 
"The consumer mood is currently darker than in the early stages of the COVID pandemic, the result of the 2016 Brexit referendum and even the shock of the 2008 global financial crisis, and now there's talk of a looming recession," Joe Staton, client strategy director at GfK, said.
Other figures released this week have prompted concerns about how far the Bank of England can raise interest rates after five hikes since December without causing the economy to enter a recession.
Concerns about the impact on living standards contributed to Prime Minister Boris Johnson's Conservative Party suffering two defeats in parliamentary by-elections on Friday. more info
Johnson responded to the defeats by promising to do more to combat the rising cost of living.
Overall UK inflation is at a 40-year high of 9.1 per cent and is expected to grow to more than 11 per cent in October, according to the Bank of England.
Following the retail sales statistics, the pound fell temporarily before recovering.
According to the ONS, food shop sales decreased by 1.6 percent in May compared to April, the worst monthly drop since January.
"Many customers are buying down, particularly with food, choosing value range items where they might previously have bought premium goods," Helen Dickinson, chief executive of the British Retail Consortium, said.
According to the ONS, automotive fuel sales increased by 1.1 per cent, presumably suggesting a decrease in the proportion of persons working only from home.
According to the ONS, retail sales decreased by 1.3 per cent in the three months to May after decreasing by 1.4 per cent in the previous three months.
Sales volumes were 4.7 per cent lower than a year earlier.
Sales volumes were down 0.7 per cent on the month and 5.7 per cent year on year, excluding fuel, which has risen in price.