UK Retailers Warn of Low Sales in 2022 Due to Soaring Inflation

British retailers said that soaring costs of living amid the emergence of the Omicron virus could shrink household budgets and drag down retail sales in the U.K. this year.

In a joint report with accountancy firm KPMG, the British Retail Consortium (BRC) noted that total retail sales in the U.K. went up 2.1 percent in December from the year before and total sales grew by 9.9 percent year-on-year as the economy recovered from lockdowns.

However, BRS said that soaring prices could erode consumer confidence and affect retail sales at the start of 2022 after the strong Christmas trading period.

Helen Dickinson, chief executive of the BRC, said: “retail faces significant head winds in 2022, as consumer spending is held back by rising inflation, increasing energy bills, and April’s National Insurance hike.”

“It will take continued agility and resilience if they are to battle the storm ahead, while also tackling issues from labor shortages to rising transport and logistics costs,” Dickinson said.

Utility bills in the U.K. are expected to rise sharply from April, when the consumer price cap is lifted after surging gas and electricity costs, while the government’s plan to raise national insurance by 1.25 percent will be introduced the same month.

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