Nervous Britons cut spending and save more as wages stay stagnant
More Britons tried to rein in their spending in the second quarter of this year than at any time since 2015 as rising inflation squeezed household incomes, according to a survey published yesterday.
Some 53pc of Britons scrimped between April and June - the highest proportion since 56pc did so during the same period of 2015, market research firm Nielsen said.
This marked a swing back towards household cost-cutting over the course of the past year, which had been at its lowest level on record - 40pc - in the two months after the Brexit vote in June 2016.
But sterling's sharp depreciation in the immediate aftermath of the referendum - making imports more expensive - has pushed up shop prices at a time when wage growth is largely stagnant.
Official data published on Wednesday showed that wage growth fell by 0.5pc in real terms in the three months to June.
Nielsen said Britain declined from second in Europe's consumer confidence rankings just before the Brexit vote to ninth now.
Shoppers have changed their behaviour in a way that is reminiscent of the aftermath of the financial crisis in 2008/9, said Steve Smith, managing director of Nielsen UK and Ireland.
Almost one in three (30pc) of respondents cited switching to cheaper grocery brands as their money-saving tactic, with another 27pc working to save on gas and electricity.
A quarter of respondents spent less on new clothes and take-away meals, while fewer were willing to cut down on out-of-home entertainment, holidays and alcohol.
"Shoppers are well-trained to use their household grocery budgets as a way to manage overall household costs, particularly as the desire to treat themselves remains," said Smith.
"This is shown by the fact relatively fewer people are willing to sacrifice entertainment, holidays and takeaway meals."
British retail sales slowed as expected in July after a strong second quarter, as shoppers cut back on purchases of most things other than food, adding to worries about a fall in consumer demand.
Retail sales volumes grew by 0.3pc month-on-month in July, a shade above economists' forecasts in a Reuters poll for a 0.2pc rise, the Office for National Statistics said, and the same as a downwardly revised reading for June.
Looking at the three months to July as a whole, which smooths out monthly volatility in the data, sales growth dropped to 0.6pc from an unchanged 1.5pc for the second quarter, the strongest calendar quarter since the third quarter of 2016.
Rising inflation has eaten into British consumers' disposable income this year, causing the weakest first quarter for retail sales since 2010, as the fall in the pound after last year's Brexit vote pushed up the cost of the imports.
Compared with a year earlier, growth in sales volumes was the slowest since November 2013 at 1.8pc. (Reuters)