UK economy slows down as buyers brace for Rachel Reeves's nightmare Budget

Retail sales growth slowed in September as households tightened spending ahead of next month's Budget and rising prices took their toll. Total sales rose 2.3% year on year - a slight improvement on last September's 2% growth and just above the 12-month average of 2.1%, according to the British Retail Consortium (BRC) and KPMG data.

Food sales climbed 4.3%, largely fuelled by inflation, while non-food items saw a 0.7% uptick. Online non-food sales edged up just 1%, well below the 3.4% gain recorded a year ago. Unseasonably mild weather weighed on clothing sles, although the launch of new Apple products gave electronics a boost.

Helen Dickinson, chief executive at BRC, warned that concerns over inflation, business rates, and the looming Budget were clouding both shopper sentiment and retailer plans ahead of the critical Christmas period.

She said: "With the Budget looming large, and households facing higher bills, retail spending rose more slowly than in recent months.

"Rising inflation and a potentially taxing Budget is weighing on the minds of many households planning their Christmas spending."

She added: "The future of many large anchor stores and thousands of jobs remains in jeopardy while the Treasury keeps the risk of a new business rates surtax on the table."

KPMG's Linda Ellett said spending remains cautious and "targeted", noting that retailers are gearing up for promotions to drive sales through the "golden quarter" for the sector.

Data from Barclays showed card spending fell 0.7% year-on-year, though categories such as clothing, furniture, and beauty products still saw modest growth as consumers treated themselves to smaller "pick-me-up" purchases.

Nearly half (44%) of UK adults reported adjusting their finances before November's Budget, even as household confidence reached its highest level in seven months.

Karen Johnson, head of retail at Barclays, said: "We're continuing to see cautious spending, and shoppers are consistently seeking out areas they can cut back on.

"However, multiple retail categories have proven to be resilient in recent months, with furniture, clothing, and beauty all remaining in growth since February of this year."

Chancellor Rachel Reeves will unveil the autumn Budget on November 26.