BRC predicts pick-up in non-food sales for second half of 2023

The British Retail Consortium (BRC) has forecast that low sales growth will continue but expects non-food sales to improve in the second half of the year.

It said that sales growth in 2022 was low, remaining below current inflation, suggesting that volumes were down compared with 2021.

The BRC predicted an overall growth in sales of between 2.3% and 3.5% for 2023 as a whole. It estimated growth of between 1% and 2.3% in the first half of this year, but as inflation slows and consumer confidence improves, it said it expects to see growth for the second half of the year of between 3.5% and 4.7%.

While its figures predict that food sales will fall slightly in the second half of the year, it expects non-food sales to move from decline into growth.

Summarising sales in 2022, the BRC pointed out that even though retail sales grew by 2.3%, once inflation is taken into account – more than 11% across the economy – these figures represent a fall in sales volumes for both the food and non-food sectors.

BRC director of insight Kris Hamer said: “The first half of the year is likely to be challenging for households and retailers. Ongoing inflation will make sales appear to be rising, but we expect falling volumes as consumers continue to manage their spending. We also don’t see many signs at this stage of retailers’ input costs easing, with energy costs expected to rise by £7.5 billion as the Government’s Energy Bill Relief Scheme comes to an end in March, putting ongoing upwards pressure on prices.”

But he pointed to a brighter outlook for the latter half of the year: “There is cause for optimism in the second half of 2023, when we expect inflation to ease and improving consumer confidence to result in an improvement to sales growth, and corresponding volumes.

“Despite facing huge cost pressures, retailers will continue to do all they can to keep prices affordable for their customers. The market remains very competitive, and every retailer will be striving to attract and retain customers as people continue to be discerning in their purchasing decisions.”

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