Saturday 23 September marks the one year anniversary of the former Prime Minister Liz Truss and the former Chancellor Kwasi Kwarteng’s now notorious mini-budget.
The latest retail statistics show its impact is still lingering for both High Street and online retailers, says the home delivery expert ParcelHero.
Today’s Office for National Statistics (ONS) retail sales results show that overall retail sales volumes in August rose by a fractional 0.4% against July, but were actually down -1.4% year-on-year.
Sometimes a fall in High Street sales is offset by a rise in online results. However, non-store retailing sales volumes, which are predominantly online retailers, also fell by -1.3% in August 2023 against July 2023. The value of online sales also fell -0.9% against the previous month.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., said, ‘August’s rather disappointing retail sales figures show that shoppers and retailers are still paying the price for a moment of economic madness exactly one year ago.
‘Following then-Chancellor Kwasi Kwarteng’s tax-cutting mini-budget on Friday 23 September 2022, the pound fell to a record low of £1.03 against the US dollar by the following Monday.
By the end of the week, the Bank of England had triggered an emergency £65bn bond-buying programme, the FTSE 100 had fallen by about 232 points and The British Retail Consortium revealed food price inflation had surged to 10.6%, compared to 9.3% the previous month.
‘Over the year that followed, household bills rose and the Bank of England (BOE) increased interest rates seven times, from 2.25% back in September 2022 to 5.25% on 3 August 2023.
‘The result is clear to see. There has been a continued divergence between the quantity bought (volume) and amount spent (value) in retail sales over time because of price increases. When compared with their pre-Covid level in February 2020, August’s total retail sales were 17.3% higher in value terms, but volumes were actually 1.5% lower.
‘Since then, the fall in consumer confidence is obvious. Food stores sales volumes in August remained 4.1% below their pre-Covid, February 2020 levels. The ONS says “retailers continued to indicate that the increased cost of living and food prices are affecting sales volumes.”
‘However, there are a few silver linings to today’s retail figures. Retail sales volumes did show some growth month-on month, even though 0.4% is not going to set the High Street alight. Online sales actually increased by 8.7% year-on-year, accounting for a fraction under 27% of all retail sales in August. And this week, the BOE actually held off from raising interest rates again, for the first time since that infamous mini-budget.’