The news: Inflation in the UK hit 9.1% in May—a 40-year high—as rising prices eat into consumers’ spending power.
A tale of two halves: Not everybody has been equally affected by rising costs: Many private-sector workers have benefitted from rising wages thanks to a tight labor market.
Workers protest: The cost crunch has led many public sector workers to go on strike for cost-of-living pay increases.
The impact on retailers: The hit to disposable income has caused shoppers to reduce discretionary purchases.
Looking ahead: While the outlook for the UK’s economy is gloomy, affluent consumers are still spending, noted Bill Fisher, eMarketer principal analyst at Insider Intelligence. That could help some retailers weather the storm—assuming they can overcome supply chain challenges.
As lower- and middle-income households contend with squeezed budgets and the threat of a recession, retailers that can provide any sort of relief through discounts or enhanced value will benefit.
Go further: For more on the Era of Uncertainty, read our report here.
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