February 6, 2018 / 12:19 AM / in 4 months

Brexit hit to UK food prices pushes up spending in January - BRC retailers group

LONDON, Feb 6 (Reuters) - Britain’s shoppers carried on spending more on food in January, reflecting the rise in inflation since the Brexit vote, while they again cut back on non-essential purchases, a survey showed on Tuesday.

FILE PHOTO: A shopping trolley is pushed around a supermarket in London, Britain May 19, 2015. REUTERS/Stefan Wermuth

The amount of money spent with retailers in January rose by 0.6 percent compared with a year earlier, matching growth in December and November, the British Retail Consortium (BRC) said.

The figures were on a like-for-like basis, which strips out changes in store size.

“Rising food prices continued to inflate sales growth and absorb the lion’s share of shoppers’ squeezed budgets, while sales of non-food items struggled in January,” BRC Chief Executive Helen Dickinson said.

Non-food sales fell 1.2 percent over the three months to January, a smaller fall than in the three months to December. Over a 12-month period non-food sales showed their first annual decline in nine years.

“The going remains bumpy as consumers are still seeing wages fall in real terms,” Dickinson said. “Although inflation will ease a bit this year these pressures will remain.”

Britain’s inflation rate was pushed up by the fall in the pound after the 2016 Brexit vote and hit a nearly six-year high of 3.1 percent in November. The Bank of England expects that to prove a peak and is hoping that wage growth will catch up soon.

Consumers are the main drivers of Britain’s economy which is growing more slowly than many other rich economies.

Payments firm Barclaycard (BARC.L) painted a similar picture to the BRC on Tuesday, saying its card users upped the pace of spending on essentials in January while increases in spending on non-essentials slowed.

Overall spending rose by an annual 3.9 percent, a touch slower than December’s increase of 4.0 percent and driven by the strongest increase in supermarket spending in seven months which was up 4.4 percent.

Barclaycard Managing Director Paul Lockstone said January’s rise in overall spending represented a strong start to 2018.

“But faltering confidence levels across the board suggests that consumers are feeling the effects of a post-Christmas slump, as well as the wider impact of inflation, on their everyday lives,” Lockstone said.

Reporting by William Schomberg, editing by Andy Bruce

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