UK shoppers stay cautious as fuel costs bite

British consumers maintained a cautious approach to spending in September, with fuel costs significantly impacting their budgets, according to recent surveys published on Tuesday. The British Retail Consortium (BRC) trade body reported a 1.3% increase in total retail sales compared to the previous year, showing growth from 0.7% in August but falling short of its 12-month average of 1.5%.

Barclays, based on consumer card spending data, noted a 2.0% annual increase in September, down from the 2.1% rise in August. The surveys reveal that households remain cautious about their finances, with some nervousness ahead of Finance Minister John Healey's budget scheduled for October 28.

The BRC highlighted that food sales increased by 2.5%, while non-food sales grew by 0.3%. Health and beauty sales had their strongest month of the year, while clothing and footwear experienced a weak month due to the unseasonably warm weather. Retail sales growth remained subdued in September, as households continue to be cautious with their spending in anticipation of rising household bills and taxes, stated BRC chief executive Helen Dickinson.

Barclays revealed that essential spending rose by 2.5%, driven by a 17.3% jump in fuel expenses following the record-high diesel prices. Non-essential spending, on the other hand, increased by 1.8%. Bars, pubs, and clubs witnessed a 3.8% rise in spending, marking their fourth consecutive month of growth due to the extended summer weather throughout most of September.

Barclays' confidence measure in household finances reached a seven-month high of 67%, but 68% of consumers expressed concern about the budget's impact on their finances, and 30% indicated they were cutting back on non-essential spending.