According to BRC-Opinium data, consumer expectations the state of the economy worsened to -36 in September, down from -32 in August.
People’s personal financial situation slightly worsened to -7 in September, down from -6 in August, whilst their personal spending on retail rose slightly to +5 in September, up from +4 in August.
Their personal spending overall fell slightly to +14 in September, down from +16 in August and consumer personal saving fell to 0 in August, down from +2 in September.
Helen Dickinson, Chief Executive of the British Retail Consortium, said, “Confidence among Millennials (28-43) fell dramatically this month, as their expectations for both the economy and their own finances fell by double digits.
The same generation also cut spending expectations for the months ahead, though this was largely offset by improvements for Gen Z, who remain the most optimistic. Worries about the Budget, combined with the increase in the cost of living, have eroded confidence, with little sign that inflation will come down soon.
“Inflation is now one of the biggest concerns among the public, with food inflation expected to rise to 6% by the end of the year. All eyes are now firmly locked on the 26 November, and what the Chancellor will announce. The Government can help mitigate inflation, improve the cost of living, and raise consumer confidence, by ensuring the upcoming business rates reforms offer a meaningful reduction to retail business rates, while ensuring no shop pays more as a result.”
Nicholas Hyett, Investment Manager at Wealth Club, said, “It was a scorching summer for retailers, as hot and dry weather saw every sector except automotive fuel reporting growth in August.
In fact sales have proven more resilient than markets expected, which is a welcome bit of good news at a time when sentiment around the UK economy is pretty gloomy. Sales are being helped by the fact wages continue to grow faster than inflation – though with food prices accelerating ahead we do worry that discretionary items could see demand squeezed as time goes on.
The Bank of England will also be pretty pleased with this announcement. Strong retail sales imply consumers are not in need of support from lower interest rates at the moment, suggesting the focus on inflation that led the MPC to leave interest rates unchanged yesterday is the right call.
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