Any hope that Christmas sales might boost retail business are likely to be dashed, according to a new report from Barclaycard.
Barclaycard said 48 percent of people it surveyed plan to spend less this Christmas, with 59 percent intending to buy less generous gifts and 42 percent cutting back on socialising.
The British Retail Consortium said spending at major stores in October was 1.6 percent higher than a year earlier, slowing from 2.2 percent in September and representing a big fall in the volume of purchases once inflation was taken into account.
BRC chief executive Helen Dickinson said: “Christmas will come later than last year for many and there may be more gloom than glitter as families focus on making ends meet, particularly as mortgage payments rise.”
British consumer price inflation returned to a 40-year high of 10.1 percent in September and the Bank of England last week forecast it would peak at around 11 percent during the current quarter.
The BoE also raised interest rates to three percent, their highest since 2008, and said Britain was at risk of two years of recession – longer than any in the past century, although the outright decline it forecasts is shallower than in 2008-09.
The BRC’s measure of like-for-like sales, which adjusts for changes in retailers’ floor space, slowed to 1.2 percent in October from September’s 1.8 percent.
“The small rise in sales masked a much larger drop in volumes once inflation is accounted for”, the BRC said.
Britain’s official retail sales data, which cover more shops than the BRC figures and is adjusted for inflation, showed sales volumes excluding fuel dropped 6.2 percent year-on-year in September.
Barclaycard said consumer spending in October was 3.5 pe cent higher than a year before, up from 1.8 percent growth in September but still representing a fall when adjusted for inflation.
