Consumers bought more in April, but are changing the way they shop

ii's Myron Jobson comments on the latest ONS retail sales figures amid the cost of living crisis.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Despite the surge in prices weighing on their purchasing power, UK consumers spent more in April. The turn of the seasons, which saw warmer and sunnier weather last month, most likely helped drive growth in certain areas, including higher spend on clothing.

“But the fact remains that many consumers are changing the way they shop and travel to cope with this once-in-a-generation rise in the cost of living. Many feel that now is not the best time to make big purchases such as furniture, illustrated by a fall in household good stores' sales.

“The figures also show a continued longer-term downward trend as the escalating cost of living crisis has forced many consumers to pare back spending to remain financially buoyant.

“The outlook for consumer confidence is bleak. We now know how the rise in the energy price cap at the start of April, the rise in national insurance contributions and the freezing of various tax thresholds and allowances [are] going to hit our wallets.

“Ultimately, consumers face a colossal challenge to stay on top of rising prices, and this is likely to be reflected in retail spend in the coming months. However, while many households are watching the pennies as the cost-of-living crisis rages on, we mustn’t overlook the Queen’s Platinum celebrations and sunnier weather as summertime approaches, which could help boost non-essential spend further.

“For many workers, ballooning inflation has decimated any uplift in wages - which has in turn compromised their spending power. The situation is set to become more acute, with inflation set to hit double digits in the near future The devastating Russia/Ukraine war threatens to deepen the cost-of-living crisis, with the price of energy, fuel, certain foods and commodities impacted by the conflict.

“Rising inflation means we have to spend more to get the same things. Keeping tabs on your spending remains crucial with inflation at its highest level in 40 years.”

Key points:

• Retail sales volumes rose by 1.4% in April 2022 following a fall of 1.2% in March 2022 (revised from a fall of 1.4%)
• April’s rise was driven by an increase in supermarket sales, led by alcohol and tobacco and sweet treats, with off-licences also reporting a boost
• Looking more broadly, in the three months to April 2022, sales volumes fell by 0.3% when compared with the previous three months; this continues the downward trend since summer 2021.