The decline in performance by online and high street stores since the worst part of the recession during 2008/2009 has offered new evidence that the economy is once again slowing down.The unusual warm weather during September, the weakness in supermarket spending and a decline in the growth of internet sales indicate that spending has dipped sharply over the last month.
According to the British Retail Consortium (BRC), total sales declined by 0.8% in September 2014, compared to September 2013. This year-on-year dip in consumer spending is the worst since December 2008, other than during the months which are affected by the timing of Easter.
The BRC was pleased to announce that big-ticket item spending, such as furniture, continued upward.
George Osborne, the chancellor, stated last week that the problems occurring in the eurozone have already impacted on the economy in the UK. The Bank of England has detected that the fast growth pace observed since spring 2013 will not remain.
The Bank’s governor, Mark Carney, stated that stinted growth in the eurozone would only be one of many factors to affect the timing of an interest rate increase, but was accepting that a slowdown in global growth would affect inflation.
The first increase in borrowing costs is expected to occur mid-2015, about the same time as the general election. According to Carney, the Bank’s nine-strong monetary policy committee will not be affected by politics.
Winter fashion line sales have been impacted by the Indian summer during September. Like-for-like sales, which remove the impact of increases from new stores, were down 2.1% on last year. For the quarter ending September, like-for-like food sales had declined 3.6% on the same period last year, whilst like-for-like overall in all categories declined by 0.5%.
Retailers are hoping that the temperatures will drop to a more seasonal level to try and boost sales.
Online activity attracts more than one pound in every six spent by customers, however, online non-food sales have experienced a decline since last year. Although sales increased by 8.2% compared to September 2013, the previous year’s figure was at 13.4%.
Carney stated that the slowdown in Europe’s recovery bears no resemblance to the state the currency was in a couple of years ago.