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Consumer confidence in the United Kingdom has been "crushed" by the cost of living crisis, according to new data that showed retail sales have declined for the first time in 15 months.
Tracking figures, from accountants KPMG and the British Retail Consortium industry body known as the BRC, showed retail sales dropped at an annual rate of 0.3 percent last month, down from a 3.1 percent increase in March.
The BRC-KPMG Retail Sales Monitor indicated consumers had reined in their spending on furniture, electrical equipment and other household items.
In a news release, BRC chief executive Helen Dickinson said: "The rising cost of living has crushed consumer confidence and put the brakes on consumer spending. Sales growth has been slowing since January, though the real extent of this decline has been masked by rising inflation. Customers face a difficult year, with the Bank of England predicting inflation to reach more than 10 percent."
Key Points
hit a two-year low versus the U.S. dollar following the data as traders digested growing uncertainty about the U.K.’s economic outlook. The surprise monthly contraction in March — economists had expected the figure to come in flat — presents a worry for Prime Minister Boris Johnson’s government as the country’s cost-of-living crisis is yet to reach its peak.
“Ultimately, things are only going to get worse for consumers. Energy bills are expected to soar again later this year when the price cap is reassessed, while inflation is proving stickier than expected,” said Hinesh Patel, portfolio manager at Quilter Investors.
and in April, the to accommodate soaring prices. In the Queen’s Speech to mark the state opening of parliament on Wednesday, the government promised to focus on economic growth in order to address the .
Patel added that the now faces a “near impossible task of managing the economy out of this quagmire.”
“They are in aggressive rate raising mode for now, but this cannot remain the case for long given the economic issues already starting to play out,” he added.
The Bank of England has hiked interest rates at four consecutive policy meetings as it looks to rein in inflation, and markets are pricing in another five hikes by spring of 2023.
However, James Smith, developed markets economist at , suggested that the central bank’s more cautious tone in recent weeks indicates that it will not meet these expectations, and may settle for a couple more hikes before hitting pause so as not to exert further downward pressure on economic growth.
Thursday’s GDP figures also showed that the U.K.’s dominant consumer-facing services industry took a substantial hit in March, falling 1.8% as consumer spending declined amid the squeeze on households.
“Surprisingly, health output actually increased in March despite the ongoing wind-down of Covid-related activities, but clearly, that’s unlikely to last,” Smith noted.
If inflation data starts to turn that will give us a big bounce in the markets, says Jim O’Neill
“Health spending has been a key driver of GDP through the pandemic, and in fact, the overall size of the economy would be around 1% smaller had output in this sector stayed flat since early-2020.”

Britain's consumer confidence 'crushed'
By JONATHAN POWELL in London | China Daily Global | Updated: 2022-05-11 09:27Consumer confidence in the United Kingdom has been "crushed" by the cost of living crisis, according to new data that showed retail sales have declined for the first time in 15 months.
Tracking figures, from accountants KPMG and the British Retail Consortium industry body known as the BRC, showed retail sales dropped at an annual rate of 0.3 percent last month, down from a 3.1 percent increase in March.
The BRC-KPMG Retail Sales Monitor indicated consumers had reined in their spending on furniture, electrical equipment and other household items.
In a news release, BRC chief executive Helen Dickinson said: "The rising cost of living has crushed consumer confidence and put the brakes on consumer spending. Sales growth has been slowing since January, though the real extent of this decline has been masked by rising inflation. Customers face a difficult year, with the Bank of England predicting inflation to reach more than 10 percent."
UK economy ‘only going to get worse’ as growth slowdown begins
Published Thu, May 12 20225:43 AM EDTKey Points
- A growth slowdown is underway in the U.K. after the economy shrank by 0.1% in March, with economists expecting further contractions this year.
- The surprise monthly contraction presents a worry for Prime Minister Boris Johnson’s government as the country’s cost-of-living crisis is yet to reach its peak.
- Sterling hit a two-year low versus the U.S. dollar following the GDP data as traders digested growing uncertainty about the U.K.’s economic outlook.
hit a two-year low versus the U.S. dollar following the data as traders digested growing uncertainty about the U.K.’s economic outlook. The surprise monthly contraction in March — economists had expected the figure to come in flat — presents a worry for Prime Minister Boris Johnson’s government as the country’s cost-of-living crisis is yet to reach its peak.
“Ultimately, things are only going to get worse for consumers. Energy bills are expected to soar again later this year when the price cap is reassessed, while inflation is proving stickier than expected,” said Hinesh Patel, portfolio manager at Quilter Investors.
and in April, the to accommodate soaring prices. In the Queen’s Speech to mark the state opening of parliament on Wednesday, the government promised to focus on economic growth in order to address the .
Patel added that the now faces a “near impossible task of managing the economy out of this quagmire.”
“They are in aggressive rate raising mode for now, but this cannot remain the case for long given the economic issues already starting to play out,” he added.
The Bank of England has hiked interest rates at four consecutive policy meetings as it looks to rein in inflation, and markets are pricing in another five hikes by spring of 2023.
However, James Smith, developed markets economist at , suggested that the central bank’s more cautious tone in recent weeks indicates that it will not meet these expectations, and may settle for a couple more hikes before hitting pause so as not to exert further downward pressure on economic growth.
Thursday’s GDP figures also showed that the U.K.’s dominant consumer-facing services industry took a substantial hit in March, falling 1.8% as consumer spending declined amid the squeeze on households.
Health spending to fall away
ING’s Smith said a second consecutive decline in output should be expected in April, coinciding with the end of free Covid-19 testing.“Surprisingly, health output actually increased in March despite the ongoing wind-down of Covid-related activities, but clearly, that’s unlikely to last,” Smith noted.
If inflation data starts to turn that will give us a big bounce in the markets, says Jim O’Neill
“Health spending has been a key driver of GDP through the pandemic, and in fact, the overall size of the economy would be around 1% smaller had output in this sector stayed flat since early-2020.”
