UK retail sales in February experienced the largest increase since October 2022, rising 1.2%, with non-food sales growing by 2.4% and food sales increasing by 0.9%.
Experts suggest that consumers are turning to supermarkets over takeaways and seeking out bargains to cope with the cost-of-living crisis. Although sales have returned to pre-pandemic levels, the cost of buying the same goods has surged by a staggering 16.6% in the past three years.
Danni Hewson, AJ Bell Head of Financial Analysis, highlights the impact of the current crisis on consumer behavior: “People are hunting out bargains whether they’re found in the sales aisles being well stocked by department stores, or in charity shops or other second-hand emporiums. Purchasing power has been eroded, and some retailer’s books clearly show the sector is paying a high price.”
The retail sector’s rebound since a gloomy Christmas period has exceeded expectations, even as February witnessed an unexpected uptick in inflation. However, consumers are increasingly relying on credit to cover essential purchases. Nationwide reported that nearly 4 in 10 people resorted to paying for essentials on credit.
Hewson explains that while some individuals are relatively insulated from the crisis, most households are carefully considering their spending. “There is still room in many budgets for little luxuries, but they will be carefully costed and discarded if other demands crop up,” she adds.