The Rising cost of living in the UK is affecting how Brits are spending their money. According to data released from the Office for National Statistics on Friday, U.K. retail sales volumes declined by 0.5% in May. Although not a considerable decline, it is a clear reversing of the increasing trend which saw a rise of 0.4% in the previous month.
On a quarterly basis, retail sales volumes dropped by 1.3% when compared with the previous quarter. the latest set of quarterly figures continues a downward trend that started in the summer of 2021.
May’s unexpected decline provides a strong indicator that the soaring energy costs and the rising cost of living are forcing Brits to cut back on spending.
People are spending less on food. A big hit was seen by supermarkets over the last month. Sales in supermarkets dropped 1.5% in May. There was also a 2.2% decline in specialist shops such as bakers and butchers. Due to a combination of factors such as the ongoing conflict in Ukraine; a major grain producer, and soaring oil costs have made transportation of food and other items more expensive.
Brits have had to endure the rising cost of filling up a petrol tank and soaring food prices.
There was, according to the ONS, a jump in sales of clothes – possibly due to seasonal trends. The 2.2% increase in clothes sales in May, was, however, offset by a 2.3% decline in sales of household goods. The sales of furniture decline could be linked to a cooling UK housing market.
People Cutting Back to Beat Rising Costs
In a separate survey commissioned by the BBC, 56% of the 4000 people asked said to Beat Rising Costs, they had bought fewer groceries. The same percentage said that they had even skipped meals.
With prices rising at their fastest rate for four decades, people are spending less, seemingly across the board. However, of those surveyed, more people appear to be a bit more careful than before. 82% of those surveyed said that they had switched off lights in the previous week to save money.
From the survey, 72% said that they had limited car journeys to varying degrees in the previous six months in order to save money. It is easy to see why. According to the RAC, UK Drivers now have to spend a record £103 for petrol and £106 for diesel to fill a family car,
It seems that it isn’t just the Bank of England expecting difficult economic times ahead. Brits are expecting to work more and find ways to make extra cash. 52% of those asked said that they expect to work more hours in the next six months to help in paying the bills.
A Look Ahead
The remainder of the year does not look so rosy for the UK. According to the Institute of Grocery Distribution (IGD), food prices will rise at a rate of 15% this summer. Households will have to pay more for everyday essentials such as bread, dairy, meat, and fruit and vegetables.
Winter looks a bit bleak too. Having endured a staggering £700 price rise for annual domestic gas and electricity bills, British households can expect another £800 increase in October. This, just before the cold winter weather kicks in.
The UK government did announce a financial package aimed at offsetting inflation and the rising cost of living. The aid package includes a £400 discount on all energy bills in October. People on means-tested benefits will receive payments totaling £650. Old age pensioners will get more this winter and billpayers with disabilities will receive more too. However, many feel this does not address the problem and goes no way near enough to help those on low incomes. 64% of those surveyed said that the government support was insufficient.
With the war still raging in Ukraine, rising covid cases, and soaring inflation, the outlook looks bleak. Brits and others will have to continue to reign in spending to Beat Rising costs.
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