UK retail sales growth cooled in September as concerns over inflation and expected tax hikes in Chancellor Rachel Reeves’s upcoming autumn budget dampened consumer confidence. The British Retail Consortium (BRC) reported that total retail sales grew 2.3% year-on-year, down from 3.1% in August, falling behind the overall inflation rate of 3.8%.
Barclays data also showed a 0.7% drop in card spending compared with September last year, reflecting tighter household budgets and cautious financial planning. Nearly half of surveyed consumers said they were adjusting their spending ahead of the November 26 budget, with many choosing to build savings.
BRC chief executive Helen Dickinson noted that inflation, budget uncertainty, and milder weather have contributed to slower spending patterns. While food sales rose 4.3%, this growth was mostly driven by higher grocery prices rather than increased volume. Non-food sales grew just 0.7%, below the 12-month average, as shoppers delayed autumn wardrobe updates. A boost came from demand for electronics following Apple’s new product launches.
Economic experts warn that tax increases could add pressure to businesses and consumers alike. The British Chambers of Commerce urged the government to avoid further tax hikes, calling the upcoming budget a critical moment for economic stability. Meanwhile, Barclays reported consumer confidence at a four-year high of 78%, but spending remains cautious as households brace for potential fiscal tightening.