Consumer confidence and retail sales take a hit

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25th April 2022

Bite-sized business news from the UK and beyond

Good morning Over the next week a million half price rail tickets will be available as part of the ‘Great British Rail Sale’ to encourage people to travel by train after Covid led to a big drop in passenger numbers.
Although one million tickets sounds like a lot it’s only a tiny proportion of the 160m rail journeys that usually take place over the offer period.

Today's stories

Consumer confidence and retail sales take a hit
Supermarkets limit cooking oil purchases

ECONOMY
Consumer confidence and retail sales take a hit

What’s going on?
A survey of British consumers found that their confidence in the economy has reached a low not seen since the 2008 global financial crisis. Separately UK retail sales in March fell by 1.4%, worse than the 0.3% dip expected by economists.

Why is this important?

Amid a perfect storm of higher taxes, sky high energy prices and 30-year high inflation, consumers are feeling gloomy and tightening their belts.

The UK consumer confidence index measures how people feel about their personal finances and the wider economic outlook.

This month the consumer confidence index dropped by seven points to -38 - its lowest level since 2008 and far off the -15 where it was a year ago.

Official data released last week showed that this pessimistic outlook is already feeding through to lower retail sales.

Overall retail spending fell by 1.4% in March compared to the 0.5% drop the month before. However they remain 2.2% above pre-pandemic levels.

Spending on groceries food fell for the fifth straight month with a steep drop in sales at butchers and bakers.

Consumer shopping habits are also returning to pre-Covid norms. Online spending fell to 26% as a proportion of total sales – the lowest since February 2020, with shoppers returning to in person retail post lockdown. Online shopping peaked at 37% in February 2021 when the high street was closed.

Zooming out

With inflation at 7% and set to approach double digits in the not-so-distant future, the Bank of England is faced with a policymaking dilemma.

Ordinarily raising interest rates would be the antidote to combat inflation but with consumer confidence at such a record low, increasing the cost of borrowing would be another headache for consumers and households alike and could tip the economy into a dreaded recession.

Other stories to keep you in the loop

Rishi Sunak to host major City figures at £10,000-a-table Tory fundraiser
Morrisons cuts prices of 500 items as inflation soars
Twitter board meets with Elon Musk to discuss takeover plan
Center Parcs owner mulls £4bn sale or IPO of business
Reebok-owner races into auction of Ted Baker
Revolut overhauls Ukraine refugee scheme after customers ‘exploit’ referral fees
‘Tsunami’ of insolvencies hits England and Wales as pandemic support withdrawn
Failed energy supplier Bulb pays millions in bonuses
UK’s largest laundry service snaps up rival
Mike Ashley’s Frasers Group to hand nearly £21m to future son-in-law

FOOD
Supermarkets limit cooking oil purchases

Tesco, Waitrose, Morrisons and Iceland have introduced restrictions to the number of bottles of cooking oil customers can buy, amid supply chain issues caused by the war in Ukraine.

Tesco will allow three items per customer, while Waitrose and Morrisons have placed limits of two bottles each and Iceland just one. Sainsbury’s and Asda have yet to impose limits.

Ukraine and Russia supply 80% of the world's sunflower supply, and the conflict has caused serious disruption to imports to the UK. Prices are already around 20% higher than they were 12 months ago. Sunflower is used in the production of hundreds of food items and is the UK’s most popular cooking oil.

In response, manufacturers of foods that use the oil in production, are tweaking their recipes to make use of alternative ingredients. This means the taste of crisps, oven chips and biscuits could change. Rapeseed oil is very similar and will be the first-choice alternative for many manufacturers.

Springtime is usually when Ukrainian sunflower farmers sow seeds for harvest in October and November. But the war means this schedule has been disordered which will have knock on impacts for months and even years to come.

Stat of the day

Over 90% of the world’s plastic is never recycled

Interesting links from around the web

30 years of Nando’s, Wagamama and a British food revolution
The definitive answer to the question - how often should I wash my jeans?
50 ways to make money during a cost of living crisis

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Consumer confidence and retail sales take a hit

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