It’s bad news for ecommerce retailers this Christmas: inflation is up and that means most UK households have diminished spending power as they approach the seasonal shopping season. The news reports are fairly clear that most Brits will be holding back and spending less this month.
The Office for National Statistics (ONS) has reported that inflation topped 3.1% in November 2017. That’s over the UK government’s target and means that the Bank of England must report into the Chancellor of the Exchequer and explain the reasons.
And a critical reason, that will be familiar to many Tamebay readers, relates to Brexit. The relative weakness of Sterling for the past 18 months or so since the referendum vote has meant notable increases in import costs when it comes to both raw materials and consumer goods.
Those costs are now being keenly felt by shoppers every day and are squeezing spending. And don’t forget earnings. Plenty of people haven’t seen an increase in their wage packet at all in the past decade, let alone one which is equal to the increased costs, which specifically include food stuffs and fuel.
Financial Secretary to the Treasury Mel Stride said: “Inflation is expected to fall over the coming year, but I recognise families are feeling a squeeze now. We are determined to help, which is why the autumn budget cut income tax, boosted basic pay by more than inflation and froze alcohol and fuel duties.”
The key question for us must regard the extent to which this news is going to further impact consumer spending and ecommerce business in the immediate term.
It could be that online is impervious to this negativity and, rather, the High Street will take the brunt of the increased pressure. But there can be little doubt that even a little boost in Sterling would be welcome by both importers and exporters.
