UK consumers retrench with 1.6% drop in retail sales

Bank of England rate hike slated for next week is a further headache

16 September 2022

And so it begins. Consumers in the UK retrenched in August with the cost of living crisis inevitably impacting spending patterns. A 1.6% drop in sales doesn’t sound a lot, but it was more than three times the drop forecast by economists and notably all categories in the monthly retail sales report saw a decline. This paints a gloomy picture for retail stocks, which have priced in a lot of the shifting consumer spending patterns so far this year as the energy price spike manifested. Irrespective of the energy price cap announced by newly ensconced Prime Minister Liz Truss, the disposable incomes of most consumers have been massively squeezed and trade down substitutions into cheaper brands is hardly the best fillip for any consumer led recovery hopes. The rate hike from the Bank of England slated for next week is a further headache, but one which it feels is necessary, albeit painful medicine.