British retail sales showed “sluggish” growth last month as shoppers became increasingly cautious ahead of the Autumn Budget.
Total sales at retailers increased by 1.3 per cent in the 12 months to September, compared to 2.3 per cent growth in September 2025, according to the British Retail Consortium (BRC) and Big Four giant KPMG.
The trade body, which represents top retailers including Tesco, Sainsbury’s and Marks & Spencer, said high street firms are holding off cost rises but cannot withstand a Budget which brings in higher taxes.
Food sales drove the overall increase in retail spending, growing 2.5 per cent, though this remained well below last September’s 4.3 per cent rise and the 3.1 per cent 12-month average. While non-food sales were broadly flat, growing 0.3 per cent compared to the yearly average of 0.2 per cent.
Health and beauty recorded its strongest month of the year, as Pokemon’s 30th anniversary products, including branded trading cards, boosted toy sales.
As Brits prioritised small indulgences, such as make-up and health products, fashion dragged on sales growth. Analysts said that prolonged summer temperatures may have delayed shoppers’ switch to autumn and winter wardrobes.
Chancellor warned retail taxes would risk jobs
Linda Ellet, KPMG’s head of consumer, retail and leisure, said consumers are becoming “increasingly selective” amid growing fears that the Iran war is driving inflation.
She said: “This is a battle for share of wallet, with shoppers prioritising some categories while postponing purchases elsewhere. With the Black Friday promotional period approaching, some consumers will inevitably be questioning whether today’s purchase might be cheaper tomorrow.”
Sarah Bradbury, chief executive of retail insights firm IGD, said pre-Budget tax speculation will be “weighing on shoppers’ minds, with these factors adding pressure to household finances and translating into weaker spending.
“While Halloween may support impulse grocery sales in the short term, food businesses’ attention will be firmly on the Budget and what it could mean for consumer spending power, business costs and demand heading into 2027.”
Retailers have urged Chancellor John Healey to avoid a so-called warehouse tax, instead urging the him to exempt high street businesses from the highest business rates multiplier.
Helen Dickinson, chief executive of the BRC, said: “The Chancellor cannot promise to ease the cost of living while piling more costs onto the retailers working to keep prices down.
“Another rise in business rates would push up pressure on prices, choke off high-street investment and put local jobs at risk. This Budget must back retail to invest, employ and grow — not make it harder.”