Retailers urge Healey to ease cost burden as consumer confidence falls

John Healey has been urged to address the rising costs facing businesses as consumer confidence deteriorated ahead of the upcoming Budget. The British Retail Consortium reported that confidence in the state of the economy worsened from negative 32 to negative 40 in October. This marks the third consecutive month of declining sentiment, driven by growing fears regarding inflation and interest rates. Businesses have warned that they are unable to stimulate further spending without tax relief.

Consumer expectations for personal finances over the next three months also declined, moving from negative 15 to negative 18. This represents the second-lowest level on record. While spending expectations rose sharply in October, from a net reading of five to 15, the British Retail Consortium noted that rising inflation has worsened the outlook. Shoppers had already planned to increase expenditure during the run-up to Christmas, but the current economic environment has complicated these plans.

Inflation data revealed on Wednesday showed consumer prices leapt from 3.1 per cent to 3.5 per cent in the year to September. This increase was higher than economists had predicted. More than a third of shoppers, specifically 36 per cent, expect to spend more on groceries in the next three months. This is a significant rise from 28 per cent in September, indicating that households are bracing for sharp food price increases. Supermarket executives stated they are managing rising energy and supply costs, but industry figures project food inflation could surge to 6.4 per cent by July next year.

Helen Dickinson, chief executive of the British Retail Consortium, stated that households are looking to the Chancellor to tackle the cost of living challenge. She argued that the government must act on the costs hitting the industry, including employer National Insurance Contributions and business rates. Dickinson added that retailers are doing everything possible to keep prices down, but a 20 per cent jump in tax on the industry over two years has left businesses with no room for manoeuvre. Retailers have recently urged the government to exclude high street shops from the highest business rates multiplier and to roll back recent increases to employer National Insurance Contributions. These measures, along with above-inflation minimum wage hikes, are preventing investment in employment. Thierry Garnier, chief executive of Kingfisher, noted that the company’s provision of work experience placements for young people depends on the decisions made in this Budget.