Feeling the effects of inflation, UK citizens cut non-essential spending

British consumers are cutting back on purchases of clothes and other non-essential items to afford skyrocketing utility bills and food price rises, a survey showed on Tuesday.

With the country's next prime minister, Liz Truss, pledging help to tackle the cost of living crisis, the British Retail Consortium said the total value of sales of its members - mostly large chains and major supermarkets - rose 1.0% last month compared with August 2021, weaker than the 2.3% rise in July. On a like-for-like basis, excluding changes in store space, sales rose 0.5%, slowing from July's 1.6% increase. The figures are not adjusted for inflation, which means the small increase in sales masked a much larger decline in volumes. "Worryingly, the August data revealed a significant drop in clothing sales, the strongest performing category this year, which could be a sign that shoppers are starting to pull back on non-essential spending," said Don Williams, retail partner at KPMG, which prepared the data. Austerity among British households could be an early sign of a looming recession. The Bank of England forecasts that Britain's economy will enter recession at the end of the year and only emerge from recession in early 2024. Separate data from Barclaycard showed that spending on consumer payment cards rose 4.7% year-on-year in August, the smallest increase since March 2021, while spending on essential items such as food rose 7.2%, the highest since December 2021. At the same time, the average electricity bill per customer increased by 45.2%. Sales at clothing retailers fell by almost 2% compared to August 2021, while department store sales were down 4.3% and overseas travel also fell. However, the domestic travel and hospitality sectors benefited from the warm weather and an increase in stays, as local hotels, resorts, bars and clubs saw sales rise. Britons are struggling with inflation, which topped 10% in July, largely driven by higher energy prices. Goldman Sachs (NYSE:GS) said that if gas prices remain high, inflation could reach 22% by early 2023. Barclaycard said a survey showed that 60% of consumers are confident they can weather the cost of living storm, up from 66% in July. "While many Brits plan to continue cutting discretionary spending through the fall and winter, they are taking a resourceful approach to saving money to weather the tough times ahead," said Jose Carvalho, head of consumer products at Barclaycard. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!