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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 06 March, 2017​​​​​

​​​​Pressures mount on UK consumer

​Consumer spending power grew at the slowest rate for 2.5 years in January, according to Asda’s Income Tracker. The slowing uplift in disposable income growth (3.5% YOY) was mainly due to the sharp rise in petrol prices (up 16.8% YoY). Prices in restaurants, hotels and communication also rose, increasing the overall cost of living for UK families. The inflationary message was reinforced by the BRC’s most recent Shop Price Index report, which recorded the first increases in food prices since April last year. In contrast to January’s drop of 0.8%, food prices climbed 0.4% in February, as the falling value of the pound and increased import costs started to impact grocery prices. Higher inflation is expected to curb household spending over the next 12 months.

Further pressure on the UK consumer’s spending capacity was reflected in UK consumer confidence levels last month. Consumer confidence fell to -6 in February, down from -5 in January, according to the latest GfK Consumer Confidence Index, following a gradually downward trend since last October. While consumer confidence remains well above its long-run average for the series, any momentum behind the post-Brexit, debt-fuelled consumer-spending boom now appears to be softening.

Despite the challenging market conditions, many retail and leisure operators, including Poundland, Boohoo, Zalando and Jimmy Choo, continue to report positive sales, with expansion still on the agenda for some. B&Q has announced it is opening its first high street shop on north London's Holloway Road later this month, in an effort to adapt to changing shopping habits. Holland & Barrett plans to open 60 stores in Britain and Ireland this year, in a new phase of expansion, and gym brand Anytime Fitness plans to double its portfolio to 200 sites in 2017, a move that would make it the biggest player in the UK gym market.​

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