UK Consumers Cut Spending Due to Chilly June Weather

UK consumers reduced their spending in June due to unusually cold weather, which negatively impacted retail and hospitality sectors. The chilly conditions led to decreased outdoor activities and lower sales, as people stayed indoors and cut back on discretionary spending. This trend highlights how seasonal weather can significantly influence consumer behavior and economic performance, affecting various industries and overall market dynamics.

British consumer spending contracted in June, impacted by adverse weather conditions, according to surveys released on Tuesday. These surveys add to recent indicators of the country's sluggish economic growth, which the new Labour government has vowed to improve.

Barclays reported a 0.6% annual decline in spending on its credit and debit cards in June, marking the first drop since February 2021. The decline was attributed to the cool weather at the beginning of the month.

Karen Johnson, Head of Retail at Barclays, stated, "Once again, our data demonstrates the undeniable impact that unseasonable weather can have on consumer spending." She noted that the slow demand at the start of June prompted some fashion brands to adjust their sales schedules, but the situation has improved with the arrival of sunnier days.

Similarly, the British Retail Consortium reported a 0.2% drop in sales values in June compared to a year earlier, following a 0.7% rise in May. These findings align with other indicators of slowing growth, including business surveys, after the economy recovered in the first quarter from a recession in the latter half of 2023.

Boosting economic growth is a key priority for new Prime Minister Keir Starmer, whose Labour Party achieved a landslide victory in the parliamentary elections on July 4.

Barclays also noted a decline in supermarket spending for the first time in two years last month, but expressed optimism for the future. Jack Meaning, Barclays' chief UK economist, said, "While June’s data suggests a weak month, the view looking ahead to the second half of the year is one of falling interest rates, growing real incomes, and increasing confidence among consumers to spend and businesses to invest."

KPMG, sponsor of the BRC's retail sales survey, acknowledged an improving economic environment but pointed out that many retailers continue to face challenges. According to official data, retail sales volumes, excluding petrol, remain slightly below their pre-pandemic levels.

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Source: Reuters‍