UK shoppers cut spending amid pressure on Bank of England over inflation

theguardian.com:

Consumers are cutting back on purchases amid growing pressure on the Bank of England to tame inflation.

Retail sales increased 5.2% on a like-for-like basis in April compared with the same period a year earlier, according to data from the British Retail Consortium and the consultancy KPMG.

But that headline growth in retail sales, which is not adjusted for inflation, masked slumping volumes of goods and services. Inflation is stuck in double digits at 10.1%, and has fallen more slowly than expected.

Rate-setters at the Bank of England are due to meet this week as they battle to tame the rising cost of living. Many economists predict they will raise its key interest rate by 0.25 percentage points, taking it to 4.5% – a fresh 14-year high.

It comes as British retailers cling on to hopes of a summer of spending. The latest weak retail figures have added to fears of a hit to the UK economy if the “tank empties” for consumers.

Separate figures compiled by Barclays showed a 4.3% year-on-year increase in consumer card spending in April, which is also well short of inflation.

“Consumer demand has so far been fairly resilient to the twin drags of high inflation and high interest rates, but as government energy support comes to an end for many, savings start to dwindle and other household bills rise, it is likely that the next few months will continue to be challenging as the consumer tank empties,” said Paul Martin, the UK head of retail at KPMG.

Sales volumes fell across food and non-food items such as clothing, with poor weather putting a dampener on consumers’ appetite for summer outfits.

“Retailers will be hoping that the Coronation, coupled with a month full of bank holidays and inflation levels starting to head in the right