Britain’s retailers posted their weakest sales figures for five months in September as consumer confidence took a knock in the face of heightened Brexit uncertainty.
Figures from the British Retail Consortium (BRC)-KPMG sales monitor showed that retail sales fell by 0.2% on a like-for-like basis compared to the same month in 2017.
This compares to an increase of 0.2% in August, when warm weather fuelled-grocery spending boosted the sector.
Total sales also dipped, falling from 1.3% in August to 0.7%.
Growth in grocery spending “retreated” in September, the BRC said, while non-food sales were hammered as “back-to-school” sales failed to deliver.
Jon Woolven, of IGD, said: “Shopper confidence has followed a downward path with those expecting to be financially better off over the year ahead dipping from 26% in July to 22% in September.
“Brexit-related uncertainty probably plays a part in this, so retailers will be hoping for a clear resolution ahead of the Christmas shopping season.”
UK businesses are sweating over the ability of the Conservative Government to deliver on their promise of a Brexit that contains “all of the benefits” of EU membership while simultaneously exiting the bloc.
Major concerns are also weighing on ordinary Britons who are expected to be hit with disruptions to food, medicine, power and fuel supplies in the event of a no-deal Brexit, as well as soaring inflation.
All of this is giving firms a headache before the critical Christmas trading period.
Paul Martin, UK head of retail at KPMG, said: “The final golden quarter of the year marks the ultimate test for many players, but retailers must also successfully navigate: the upcoming government Budget, Black Friday, Christmas, and of course Brexit.”
BRC boss Helen Dickinson also weighed into the row over business rates and taxes in the retail sector, accusing the Government of presiding over a system that is contributing to stores closures and job losses.
“The retail industry pays a disproportionate amount of tax.
“It represents 5% of the economy but pays 10% of business tax and almost 25% of business rates.
“A tax system skewed towards high taxes on people and property is contributing to stores closures and job losses and is stalling the successful reinvention of our high streets,” she said.
Ms Dickinson is calling for a tax system “fit for the 21st century” that more fairly distributes taxes across the economy.
Her comments come as the sector is beset by failures, including several high-profile administrations and store closure programmes.
House of Fraser, ToysRUs and Maplin are among the chains to have collapsed, with the likes of Homebase, New Look and a host of casual dining firms closing scores of outlets this year.
A separate survey by Barclaycard showed that consumer spending grew 3.9% year on year in September, returning to a more modest level after an unusually strong summer.
High prices at the petrol pump meant essential spending remained “robust” at 4.6% while entertainment recorded its strongest rise since June 2017, helped along by increases in ticket sales, pubs and restaurants.
However, nearly half of consumers say they are planning to spend less on Christmas than they did last year.