Slender uptick for Scottish retail sales as inflation eats away at growth

May 16, 2023 03:42 PM AEST | By PAMEDIA
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High inflation effectively erased any real increase in retail sales last month, but Scots sprucing up their homes and gardens in time for summer helped push the number into positive territory.

In April sales north of the border were 9.1% higher than the same month last year, the Scottish Retail Consortium said on Wednesday, but when inflation was taken into account the div slumped to a 0.3% year-on-year increase.

David Lonsdale, the consortium’s director, said that “Easter provided a slender but nonetheless welcome uplift in retail sales” last month.

“The real terms value of retail sales edged back into positive territory, after the decline witnessed in March, driven by health and beauty categories and as people spruced up their homes and gardens,” he said.

With inflation at some of the highest levels recently recorded, a proportion of the sales growth is a reflection of rising prices rather than increased volumes.

The rising prices meant households in Scotland were spending more on groceries while other areas of spending were losing out, with categories like clothing and footwear, larger furniture, and electrical items all losing out.

But, Mr Lonsdale said, there were pockets of demand including for energy saving appliances, gaming consoles, and gardening and DIY.

Total food sales went up by 15.4% compared to April 2022, when they had gone up by 2.9%, meanwhile total non-food sales increased by 3.9% compared to the same month last year when they had climbed by 25.7%.

Mr Lonsdale said: “Whilst overall inflationary pressures and more specifically food price rises have hopefully crested and will begin to ease, it’s too soon to say whether this will correspond with greater spending on more discretionary retail products,” he said.

“After all, Scotland’s shoppers face several headwinds which may prove hard to shrug off and which could well crimp consumer spending, notably higher council tax and income tax and elevated mortgage rates.”

Paul Martin, UK head of retail at KPMG, said consumer demand had so far been “fairly resilient to the twin drags of high inflation and high interest rates” but warned as “Government energy support comes to an end for many, savings start to dwindle and other household bills rise, it is likely that the next few months will continue to be challenging as the consumer tank empties”.

“Much hinges on whether soaring food inflation can be brought under control enough to allow consumers to comfortably start spending again on non-essential items,” Mr Martin said.

“Retailers will be hoping that the Coronation, coupled with a month full of bank holidays and inflation easing, will boost consumer confidence significantly enough to start to see real, profitable growth.”


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