LONDON, Dec 5 (Reuters) – British shoppers snapped up Black Friday bargains last month but an increasing share of their budgets was taken up by the rising cost of food, retailers said on Tuesday.
Britain’s consumers are being squeezed by slow wage growth and the jump in inflation that followed last year’s Brexit vote, prompting many forecasters to predict a further weakening in the overall economy in 2018 after a slowdown this year.
The amount of money spent with retailers last month rose by 0.6 percent compared with a year earlier on a like-for-like basis, stripping out changes in store size, the British Retail Consortium (BRC) said.
That represented a recovery from a 1.0 percent fall in the previous month which was the weakest October since 2008.
But the environment remained tough for retailers who had hoped for a boost from their late-November sales promotions.
“Black Friday, the big retail event of the month, failed to fundamentally shift underlying trends in spending,” Helen Dickinson, the BRC’s chief executive, said.
Total sales last month rose by 1.5 percent, returning to the average growth seen in the past 12 months.
In a sign of how rising prices for many everyday staples are affecting consumers, BRC said the amount of money spent on food over the 12 months to November rose by an average 3.4 percent, the biggest increase since March 2013.
By contrast, Black Friday discounts served mostly to shift sales from other parts of the Christmas holidays, BRC said.
Payments firm Barclaycard (BARC.L) also said consumers remained cautious with spending up by an annual 2.8 percent in November, less than the most recent reading of inflation for a second month in a row.
It said confidence in household finances fell from 64 percent to 56 percent as inflation and the Bank of England’s first interest rate rise in a decade weighed on sentiment.
The squeeze on consumers was weighing on companies that depend on their spending, according to the Confederation of British Industry.
It said growth among companies in consumer services slowed at the fastest rate since April 2013 in the three months to November.
That helped pushed down the overall balance of growth in a survey of nearly 700 CBI member companies to a five-month low of +6 from +11 in October with a similar picture expected for the next three months.
“While firms had anticipated that the three months to November would show steady growth in the private sector, growth has actually slipped,” CBI chief economist Rain Newton-Smith said. “Once again, consumer-facing businesses are feeling the pinch as inflationary pressures constrain incomes.”
Reporting by William Schomberg, editing by David Milliken; email@example.com; +44 20 7542 3484; Reuters Messaging: firstname.lastname@example.org