Report Summary

Period covered: 27 August - 30 September 2023

3 minute read

Note: This report summary is one or two months behind the current month as standard reporting practice. The content is indicative only and incomplete with certain data undisclosed. Become a member to access this data or take out a free 30 day membership trial now.

Electricals sales

Electricals sales fell xx% YoY in September, according to the Retail Economics Retail Sales Index (value, non-seasonally adjusted) against a xx% decline a year ago – the sharpest decline since xxxxx.

Demand weak

Electricals remains the hardest hit category having experienced xx months of consecutive sales declines, impacted by demand that was pulled forward during lockdowns and compounded by limited new releases.

The headline consumer confidence measure rose four points to -21 in September however, the harsh economic backdrop has seen confidence fluctuate in recent months with the latest data showing another deterioration, wiping out recent improvements.

Despite the recent improvement in real earnings growth the outlook for consumption remains challenging in the months ahead.

The latest earnings growth shows annual regular pay rises were 7.8% between June to August 2023 (Office for National Statistics data) – broadly in line with record highs. However, the distribution of pay rises is uneven across households.

Some industries seeing the highest pay increases are benefiting the most affluent individuals, such as those working in professional services (earnings up 7.9% YoY), real estate (8.1%) and ICT (10.0%), which have typically high starting salaries to begin with.

By comparison, industries such as arts and entertainment (+3.0%), food manufacturing (+4.3%) and quarrying (+5.4%) are facing softer earnings rises.

We expect earnings to fall below inflation before the end of the year, putting further pressure on spending.

Weak spending power

In fact, modelling earnings and inflation using the latest Bank of England forecasts shows that spending power is unlikely to return until the start of xxxx.

But some households will face upward pressure from rising monthly mortgage payments with around 350,000 households expected to see their monthly mortgage payment increase by over £500 a month by the end of 2023 according to Bank of England estimates.

Private renters are also experiencing record high rises in rental costs as landlords pass on their increased mortgage repayments.

Uncertainty around how consumers will fuel consumption, given the erosion of excess savings amassed during the pandemic through the cost of living crisis, provides a challenging backdrop for peak trading season.

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Thinking about your spending on non-essential items over the next three months, which statement best describes your intentions?