Cost Of Living Crisis And Poor Weather Cuts Down UK Consumers’s Summer Spending

Amid poor weather and cost of living crisis, UK consumers have cut back on summer spending. It found UK total retail sales decreased by 0.2% in the five weeks to 29 June, against a growth of 4.9% in June 2023. According to the latest report clothing and footwear prices fell for the seventh consecutive month in July as weak demand persisted.

Lower interest rates of bank

The latest figures came as financial markets predict the Bank’s interest rate decision will be very low as policymakers consider whether to cut borrowing costs for the first time since the Covid pandemic.

The Bank will make a decision on the basis of whether price growth in the service sector of the economy is slowing, and whether Britain’s jobs market is cooling to levels consistent with keeping inflation near 2%.

Prices fell for the seventh consecutive month

The BRC’s chief executive, Helen Dickinson, said: “Holidaymakers could pick up bargain summer wear and summer reads as clothing and footwear prices fell for the seventh consecutive month amidst persistent weak demand, and the prices of books fell.”

The BRC figures show annual shop price inflation was unchanged in July at 0.2%. This was below the three-month average rate of 0.3%, and the lowest rate since October 2021. Whereas the Non-food price deflation shows a fall compared with a year ago, continuing at 0.9%, marginal slower than 1% in June, as retailers cut their prices in an attempt to lure reluctant consumers.

Expecting Housing market activity to pick up

The global and UK head of financial services at the accountancy firm KPMG, Karim Haji, said “What is clear is that despite two straight months of inflation remaining on target, households aren’t necessarily feeling better off for it, Indeed, wage growth has slowed in recent months, which may go some way to explaining this.”

RBC Capital Markets’ European house building analyst, Anthony Codling, said: “Stability is good, but in our view, the UK housing market appears to be treading water, waiting for, hoping for the first Bank Rate cut. There is a small chance that a cut could come on Thursday, but we believe the first cut is more likely in September. Once mortgage rates start to fall, we expect housing market activity to pick up.”