UK Retailers Struggle to Stem Slumping Sales, While Canada Sees Slight Increase

U.K. retail shoppers

Retailers in the U.K. reported a drop in sales for September and expect that trend to continue next month as businesses prepare for the holiday shopping season.

A report Friday (Sept. 23) by the Confederation of British Industry (CBI) showed a strong decline in retail sales volume — 20% — after considerable growth in August, at 37%. The CBI says retailers expect sales volumes to fall again in October, though at a rate of 13%.

See also: UK Public Sector Workers Turn to BNPL Amid Real-Terms Wage Cuts

Meanwhile, seasonal sales are expected to stay “slightly poor” in October, a projected decline of 4%, while internet sales dipped at a faster pace in the year to September (down 19%) compared to August (a drop of 7%).

“A slightly more moderate rate of decline is expected for October (-14%),” the report said.

The U.K. report contrasts news from Canada, where retail sales were up slightly in August, per a Friday report by Bloomberg citing Statistics Canada. Retail receipts rose 0.4% in August, per that report, following a 2.5% decrease in July led by reduced sales at gas stations and apparel retailers.

That slight August rebound, however, leaves Canadian retail sales lower than they were in June, and in terms of volume, sales have not risen much over last year, Bloomberg reported.

In the U.K., CBI Principal Economist Martin Sartorius said the drop in sales is happening as Britain’s cost-of-living crisis puts pressure on household spending. He said recent moves by the British government to support businesses on energy costs “should help instill confidence.”

As PYMNTS reported earlier this week, the cost-of-living crisis has been especially tough on public sector workers. The recent government figures show inflation hovering around 10%, while pay increases announced in July amount to a real-terms decrease in wages.

For example, a 5% raise for teachers and police officers and a 4.5% increase for doctors and dentists came out to a 4% and 4.5% decrease in earnings when factoring in inflation.

Read more: Data Brief: 62% of Consumers Still Expect Recession, Despite Easing Inflation

Cost-of-living increases are placing similar burdens on consumers in America, who are pessimistic about seeing their buying power recover, a mood that could have a chilling effect on holiday sales this year.

That’s according to the PYMNTS report “Consumer Inflation Sentiment: Inflation Slowly Ebbs, But Consumer Outlook Remains Gloomy.”

That study found that the rising cost of essentials — things like food, fuel, and housing — has led to sharp cutbacks on discretionary spending. Seven in 10 of the consumers we surveyed who made retail purchases reported cutting back on nonessential retail spending.

Meanwhile, 61% of the consumers we surveyed said future price increases would be unsustainable. The average price increase of consumer goods in August was 8.3%, the lowest in six months but still greater than optimistic forecasts of 8.1%.

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