UK retail sales growth in September slowed as the high cost of living continues to bear down on households, reports the latest BRC-KPMG Retail Sales Monitor.
UK total retail sales increased by 2.7% in September, against a growth of 2.2% in September 2022.
This was in line with the 3-month average growth of 2.7% and below the 12-month average growth of 4.2%.
Non-Food Sales
Non-Food sales decreased 1.2% on a total basis over the three-months to September.
This is below the 12-month average growth of 0.6%. For the month of September, Non-Food was in decline year-on-year.
Over the three months to September, in-store Non-Food sales increased 0.3% on a total basis since September 2022. This is below the 12-month average growth of 3.2%.
Online Non-Food sales decreased by 3.6% in September, against a decline of 2.6% in September 2022. This was shallower than the 3-month decline of 4.1% and deeper than the 12-month decline of 3.2%.
The proportion of Non-Food items bought online (penetration rate) decreased to 34.9% in September from 35.1% in September 2022.
Food Sales
Meanwhile, food sales increased 7.4% on a total basis over the three months to September. 
This is below the 12-month average growth of 8.4%. For the month of September, Food was in growth year-on-year.
“Sales growth in September slowed as the high cost of living continues to bear down on households,” says British Retail Consortium chief executive, Helen Dickinson.
“Big ticket items such as furniture and electricals performed poorly as consumers limited spending in the face of higher housing, rental and fuel costs. The Indian summer also meant sales of autumnal clothing, knitwear and coats, have yet to materialise,” she adds.
With sales volumes down, growth has been artificially boosted by high inflation over the last two years. As inflation eases, so too will longer-term sales growth prospects.
The coming months are crucial for retailers as they enter the “Golden Quarter” and they’re investing heavily to support customers and bring prices down. However, such efforts are challenged by the £400m increase in business rates expected next year.
Dicken says: “The Chancellor should scrap the rate rise in his upcoming Budget and enable retailers to deliver more value for customers at such a critical time for the economy.”
Cost-of-living Crisis Facts
The ‘cost of living crisis’ refers to the fall in ‘real’ disposable income (adjusted for inflation and after taxes and benefits) that the UK has been experiencing since late 2021.
Higher energy and food prices, along with interest rate hikes, have all squeezed household spend, meaning people have had less money in their back pockets to spend.
When will the cost-of-living crisis end?
Times are expected to get worse before they get better, a Resolution Foundation report warns.
Real wages aren’t expected to return to early 2022 levels until the end of 2027. And typical incomes are set to remain below their real-terms pre-pandemic level for another five to six years.
The cost of living crisis is affecting almost everyone, but some are more deeply squeezed than others, with poorer and prime age (25-55) adults hit especially hard.
Cost-of-living crisis Scotland
The cost of living crisis is impacting all countries in the UK. A Scottish Government poll in May 2023 found that 49% of adults felt the cost of living crisis had negatively impacted upon their mental health.
Cost-of-living crisis Northern Ireland
And the rental market in Northern Ireland has become the most overheated of all four nations, with rents rising 9.9% in the year to March 2023.
But despite this, the warmer weather delaying household heating being switched on, along with positive news around falling inflation and a hold on rising interest rates, means consumers will hopefully be feeling a bit more confident as thoughts turn to Christmas shopping, says Paul Martin, UK Head of Retail, KPMG.
But for retailers, Martin says the fight for Christmas shoppers will be fierce this year, with promotions likely to be earlier and abundant in a bid to loosen tight household purse strings.
“Consumers will continue to seek out good deals, with price driving purchasing decisions,” he says. “This is likely to be one of the most important golden quarters that we have seen in years, as for some in the sector, it could very much determine their future,” he adds.
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