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(Adds comment from economist, background)
By Andy Bruce
LONDON, Oct 7 (Reuters) - British retailers endured their
worst September since at least the mid-1990s as people spent
money on entertainment instead, according to surveys that
painted a muted picture of household demand ahead of Brexit.
In a potential warning sign for consumer spending, which has
helped the economy in the run-up to Brexit, the British Retail
Consortium said total retail sales values declined 1.3% in
September compared with the same month last year.
Average growth over the last 12 months slowed to 0.2%, the
weakest rate since the BRC began its records in 1995.
A separate survey published on Monday by payment card
company Barclaycard showed broader consumer spending -- which
includes retail sales -- rose by a "modest" 1.6% in annual terms
in September.
While official data retail data have shown healthier
consumer demand, surveys like the BRC's have suggested household
spending may be starting to wane, adding to worries about a
possible recession even before Britain is due to leave the
European Union later this month.
Several British retailers, including supermarkets Asda
and Morrisons and home improvement group
Kingfisher, have said uncertainty around Brexit was
affecting their customers.
However, clothing retailer Next said a disappointing
start to autumn trading was down to unusually warm weather in
parts of Britain, rather than shoppers holding back on buying
new items because of Brexit.
The Barclaycard survey showed 41% of Britons were "actively
pessimistic" about their ability to spend on discretionary
items, up five percentage points from August.
"With four months of negative sales growth since March, the
ongoing political gridlock surrounding Brexit is harming both
consumers and retailers," BRC chief executive Helen Dickinson
said.
But Samuel Tombs, an economist with consultancy Pantheon
Macroeconomics, agreed the fall in September probably reflected
warm weather during the month, which hit sales of winter
clothing, rather than a more fundamental change.
"We continue to look for only a modest slowdown in
year-over-year growth in households’ real spending to 1.8% in
2020, from 1.9% this year," he wrote in a note to clients.
The BRC survey showed spending on non-food items fell as
spending on essentials rose. Online sales of non-food items were
the worst ever recorded.
By contrast, the Barclaycard report showed spending on
entertainment -- which includes cinema, sports and theatre
tickets -- increased by 4.7% in annual terms in September.
It also showed strong growth in digital services such as
Netflix, Spotify and Amazon Prime.
But confidence in the economy remained uncertain and one in
eight consumers was stockpiling Christmas food and drink.
Both surveys had been due on Tuesday, but the BRC brought
forward publication and Barclaycard followed suit.
(Additional reporting by James Davey; editing by William
Schomberg, Larry King)
