Food spending slows as prices rise
Lower food spending led to the current 0.5% decline in retail volumes as budget-conscious shoppers reduced their purchases amid higher prices.
Sales in non-food stores were stable, reflecting a 2.2% increase in clothing in anticipation of the summer season and offset by a decline in household equipment.
The amount spent by shoppers increased by 0.6% in the month and 5% year on year, but with inflation at 9.1%, it is clear that households are reducing their spending.
Hargreaves Lansdown personal finance analyst Sarah Coles said: “Over the coming months we can expect to see further weakness spread across the sector.
“It’s not just rising bills today that worry us, it’s the prospect of even higher bills tomorrow and fears of an impending recession.”
Consumer confidence at rock bottom
GfK’s consumer confidence barometer recorded an overall score of -41 for June, a record high for the second month in a row as prices continue to outpace wage growth.
Separate results covering personal finance and the broader UK economic situation all fell and the measure of significant purchase intentions remained unchanged.
GfK Client Strategy Director Joe Staton said: “Consumer sentiment is currently gloomier than at the start of the Covid pandemic, the outcome of the 2016 Brexit referendum and even the shock of the 2008 global financial crisis, and now there is talk of an impending recession.
“One thing is certain, Britain is facing a new economic reality and history shows that consumers will not hesitate to entrench and tighten their purse strings when the going gets tough.”
FTSE 100 up after Wall Street rally
Last night’s pushback by US markets means the FTSE 100 index ends the week on a high, with CMC Markets forecasting a 50 point rise to 7070.
As investors navigate between higher rates and recession risk, the Dow Jones Industrial Average climbed 0.6% on Thursday and 2.6% so far this week after three straight weekly declines.
The gains came despite Federal Reserve Chairman Jerome Powell’s warning that a recession in the United States was a possibility as the central bank focuses on controlling inflation through tighter monetary policy .
Asian markets followed Wall Street’s lead, with Hong Kong’s Hang Seng rising 1.2% and Tokyo’s Nikkei 0.7%, helped by speculation of new policy support for the Chinese economy. .