Although the UK experienced the hottest September on record, shoppers showed no sign of loosening their purse strings according to the latest updates from Kantar Worldpanel and the BRC (British Retail Consortium).

Combined with a gloomy assessment from the Bank of England of the prospects for the UK economy and the pressure for further rate increases is continuing to recede.

The sunny weather may have boosted sales of barbecue food and ice cream but Kantar’s till-roll data shows more shoppers looked for deals to make their money go further.

There was positive news in terms of grocery inflation, which slowed to 11% in September from 12.2% in August and 13.9% a year ago, but volumes were still negative meaning shoppers are putting fewer items in their baskets.

Meanwhile, the BRC reported overall consumer spending rose 2.7% in September, down from a 4.1% increase in August, as the cost-of-living crisis continued to pressure UK households.

Food and drink sales rose 7.4% on a three-month basis, with health and beauty sales also positive, but non-food sales fell into negative territory dropping 1.2% over the three months to September.

Sales of big-ticket items such as furniture and electricals performed poorly, as customers put off big purchases in the face of higher housing, rental and energy costs, while the ‘Indian summer’ meant sales of autumn/winter clothing were also disappointing.

The latter are traditionally higher margin items for clothing sellers and concern around this issue has blighted retail bellwether Next’s (NXT) shares of late.

The weakness in sales of electrical goods is backed up by figures from the ONS (Office for National Statistics) which show negative growth for the category going all the way back to early 2022.

This is bad news for electronic gadgets chain Currys (CURY) which recently said (10 October) it has seen interest for its Greek and Cypriot businesses having put them up for sale over the summer.

Online sales fell again, in the BRC figures with September marking 26 consecutive months of consecutive declines as the return to physical stores continues, underlining the importance of the multi-channel retail model.

Looking ahead to the ‘golden quarter’ and Christmas, the overall mood music isn’t particularly positive and comparisons with last year will be tough given the strength of 2022 sales, so ‘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,’ says Paul Martin, KPMG’s head of retail insights.

In its latest Financial Policy Summary and Record, the Bank of England described the current outlook for the economy as ‘challenging’, warning ‘a number of risks could weaken growth further’.

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