Retail of Woe

Posted on Apr 22, 2022. by NTI

News this week that Nestlé raised the price of KitKats at the factory gates was a blow to people who like two crunchy fingers with their morning coffee, but did nothing to change Billy's use of the wafer bar's name as rhyming slang for his girlfriend's Dad. Barbara, a spokesperson for the Office for National Statistics ('ONS'), told the NTI newsroom that she was more of a two finger kind of gal, four being too many for her at break times, whilst also explaining that the volume of retail sales in the UK fell 1.4 per cent in March, worse than the 0.3 per cent drop forecast in a Reuters poll and the second consecutive monthly decline.

If shops selling KitKats consider the numbers are bad they should spare a thought for online retailers, whose sales plummeted by 7.9 per cent in the same month, the largest fall since January 2001 and blamed it on something a bit strange; "lower levels of discretionary spending" (we think this means people have less spendable income which reduces their shopping activities from home, but are open to education on the point). This follows a substantial contraction of like numbers in February.

Published data tells us that more than 84 per cent of manufacturing companies surveyed reported increased costs compared with three months ago, with 66 per cent of service sector firms also signalling a rise in operating expenses. Hence the cost of wafers at Nestlé; but the malaise goes deeper even than KitKats, with a drop off in the momentum of new business and companies reporting slower consumer demand with customer incomes squeezed.

Babs from the ONS did show us something interesting before she popped off for a Penguin. Data from the Office showed that shoppers only marginally reduced the value of what they spent on the high street, down 0.2 per cent, but with surging inflation, the volume of goods they were able to buy shrank significantly. All of this points to a much weaker speed of recovery across almost all sectors of a British economy already drilled with the bullets of Brexit and Covid. Order books are slowing and the pound is dropping against the dollar.

So what will the Bank of England do with interest rates next month once they get a chance to scrutinse the NTI news bulletins and listen to a couple of CPD TAPs (they are huge fans)? Bugger only knows; it depends upon how KitKattish they feel.

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