UK car sales rise for 13th month running; shoppers hit by ‘skimpflation’ – business live | Business

Richard Partington

Britain’s retailers have received a boost from consumers making themselves beach-ready by increasing their spending on skincare and makeup before their summer holidays, despite the cost of living crisis.

The British Retail Consortium (BRC) said sales of health and beauty products helped drive up spending on the high street as shoppers made the most of brief spells of sunshine in August, although squeezed consumers were holding back elsewhere.

Separate figures from Barclays showed that pharmacy and health and beauty stores benefited from pre-holiday purchases, with a 5.2% rise in sales likely due to holidaymakers buying suncream and other toiletries for trips away.

The BRC said total sales rose by 4.1% compared with a year earlier, above the annual average growth rate, to recover from a disappointing month in July. However, much of the rise was the result of high inflation pushing up the value of goods being sold, masking weaker sales volumes.

UK consumers are suffering from a bout of “Skimpflation”, as manufacturers downgrade the ingredients in certain food and drink products.

Over half the Brits surveyed by Barclaycard reported that some of the food and drink products they buy have been downgraded in terms of quality or the quantity of premium ingredients, yet still cost the same or more than they used to.

Within this group, the most frequently cited skimpflation examples include crisps (44 per cent), sweets and chocolate (43 per cent), and cakes and biscuits (36 per cent).

A fifth also feel takeaways (22 per cent) and restaurant meals (20 per cent) are decreasing in quality without a corresponding fall in price.

Barclaycard also report that this ongoing trend also extends to non-food products, such as clothing, toilet paper and toiletries and cosmetics.

Food and non-food producers have been hit by rising input costs over the last 18 months, prompting them to turn to cheaper raw materials.

They’ve also been cutting the size of some items – the practice known as “Shrinkflation”. Chocolate, crisps and packs of biscuits remain the top products identified as being impacted by this ongoing trend.

Barclays also reports that consumer card spending grew 2.8% year-on-year in August. That’s below the rate of inflation (6.8% in July), indicating that shoppers bought less.

Esme Harwood, director at Barclays, explains:

“The rainy weather impacted high street and hospitality venues in August, but Brits were still keen to spend on memorable summer experiences. The huge Box Office success of ‘Barbie’ and ‘Oppenheimer’ meant entertainment enjoyed another strong month, while holidays abroad boosted international travel and pharmacy, health & beauty stores.

“Shrinkflation – and now “skimpflation” – are increasing concerns for value-seeking shoppers. However, Brits’ confidence in their household finances is unwavering, suggesting they remain resilient in the face of these inflationary pressures.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK car sales have now climbed for more than a year, despite the cost of living squeeze, as motorists shift to electric vehicles.

Data due this morning is expected to show that new car registrations in Britain rose for the 13th consecutive month in August, rising more than 20% from a year earlier.

That’s according to preliminary industry data from the Society of Motor Manufacturers and Traders (SMMT), with the final data due at 9am.

A growing number of those cars will be EVs from China – its share of the European electric car market has more than doubled in less than two years.

My colleague Jasper Jolly explains:

The UK is the largest market in Europe for Chinese electric car brands, accounting for almost a third of sales in 2023 so far, according to data from Schmidt Automotive Research on the 18 largest European car markets. About 5% of all new car sales in the UK were from Chinese brands in the first seven months of 2023, a market share second only to Sweden.

Sales are accelerating: Chinese carmakers sold almost the same number of electric cars in Europe in the first seven months of 2023 as they did in the entirety of 2022.

Chinese brands have long struggled to break into Europe because of a reputation for lower-quality cars. However, some analysts believe the advent of new battery electric technology has wiped the slate clean for Chinese brands, and sales are booming.

Also coming up today

The latest surveys of purchasing managers at UK service sector companies, and across the eurozone.

We’ll be tracking the situation at stricken UK retailer Wilko, which fell into administration last month.

It emerged last night that a rescue deal to save the majority of Wilko’s stores has been put at risk as some key suppliers want outstanding debts repaid upfront to guarantee continuing to provide products to the chain.

Investors will be digesting Australia’s central bank’s latest meeting overnight, where it left interest rates on hold again:

The agenda

• 9am BST: UK car sales report for August

• 9.00am BST: Eurozone service sector PMI report for August

• 9.30am BST: UK service sector PMI report for August

• 10am BST: Eurozone PPI survey of producer prices

• 10.30am BST: South Africa’s Q2 2023 GDP report

• 3pm BST: US factory orders for July