In a welcome boost for the economy, overall retail spending experienced a noteworthy increase of 3.4% in September 2023. This upturn outshines the 2.5% year-on-year growth reported in August 2023.
The pleasant surprise in the retail world is fuelled by several key factors.
One of the standout performers this month was the grocery sector, which saw a remarkable increase of 7.0% in spending during September 2023. This spike in grocery expenditure surpasses the year-on-year growth reported in July (5.3%) and August (4.5%) 2023.
Notably, this impressive growth in grocery spending occurred despite a slight drop in the latest CPIH inflation rate, moving from 6.4% to 6.3%. It appears consumers took advantage of the warm September weather by indulging in barbeques and picnics.
The hospitality and leisure industry also experienced a boost in September. Spending in this sector surged by 8.5%, compared to the 7.3% year-on-year growth seen in August 2023.
This increase is largely attributed to higher spending in bars, pubs, and clubs, driven by the enticing combination of warm weather and the Rugby World Cup.
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Additionally, the travel sector saw a significant uptick as consumers likely booked holidays in anticipation of upcoming breaks.
The pleasant September weather encouraged consumers to venture to the high street, resulting in a slight improvement in clothing spending, which increased by -0.2%, compared to August 2023 (-0.7%).
Shoppers browsed for seasonal fashion items, making the most of the pleasant climate. Meanwhile, spending at pharmacy, health, and beauty stores enjoyed a robust increase of 6.9%, marking the highest year-on-year growth since January 2023.
However, not all sectors experienced positive growth. Electronics retailers saw a -4.8% decrease in year-on-year growth, the lowest since December 2022.
It seems that consumers are postponing purchases, possibly in anticipation of the ‘Black Friday’ and ‘Cyber Monday’ sales, with 13% of consumers planning to make the most of these upcoming deals.
As the festive season draws nearer, consumers are demonstrating prudence in their spending habits. A substantial 40% of consumers expect this year to be more expensive than the previous one.
To ease the financial strain, 20% of consumers have already begun buying presents, while 18% have discussed mutual agreements with loved ones to cut back on gift-giving.
The prudent consumer sentiment is indicative of a population striving to make the most of their spending in a time of economic growth and uncertainty.
