February’s wet weather and ongoing cost-of-living pressures caused a slowdown in retail sales growth to just over 1% as households cut back on spending, opting to stay indoors.
Non-food sales dropped by 2.5% over three months, driven by reduced demand for footwear, appliances, furniture, and clothing, reflecting weak consumer confidence, according to the British Retail Consortium (BRC) and KPMG.
As inflation eased, food sales increased by 6%, slightly down from 6.3% in January. Despite buying more groceries, consumers kept spending tight due to high costs, including energy bills and borrowing expenses. Overall, retail sales grew by 1.1% in February, down from 1.2% in January and 1.7% in December.
While sectors like health and beauty, toys, and home accessories saw some growth, even higher earners are cutting back due to rising interest rates affecting mortgages and other loans.
Hospitality businesses struggle as spending shifts to takeaways, streaming, and home entertainment.Wet weather in southern England also led to increased spending on takeaways, fast food, and streaming services, with digital content and subscriptions growing by 11.8%, the highest since August 2021.
In contrast, restaurant spending dropped by 13.4%, while bars, pubs, and clubs saw minimal growth of 1.1%. Hospitality businesses, already facing high energy costs, wage increases, and food price inflation, continue to struggle, with 3,000 licensed premises closing last year. Major hospitality groups reported just 0.1% sales growth last month.
Helen Dickinson of the BRC noted that February’s record rain contributed to weak sales, with even Valentine’s Day failing to boost spending.
The poor retail performance adds pressure on struggling brands like Superdry, Asos, and Boohoo. Online clothing retailers were struck, with non-food online sales falling 35.7% from 36.1% the previous year.