The British Independent Retailers Association has described the announcements yesterday (August 3) that interest rates have risen and footfall is down on the high street as a ‘double blow’.
Bira expressed concerns about the Bank of England’s decision to raise the interest rate to 5.25% from 5%, marking the 14th consecutive hike. This development comes amid reports of declining footfall in July – the first drop in 14 years – attributed to the UK experiencing one of the wettest months on record. Overall footfall was down by 0.3%, a significant impact on the retail sector since July 2009.
The adverse weather conditions have had a notable impact on consumer behaviour, with many people opting to stay indoors instead of heading out to the shops.
Bira CEO Andrew Goodacre said the impact of the weather was noticeable but stressed that rising interest rates pose an even more significant threat to consumer confidence and expenditure.
He commented: “The weather in July certainly had an impact on footfall, making it a challenging month for independent retailers. However, the issue of rising interest rates cannot be ignored and shouldn’t be masked.
“It’s a double blow for the high street. Footfall in July was really disappointing. It’s easy to assume it was the weather, and the rain has not helped, but we also have to see the decline in consumer confidence and consumer expenditure.”
He added: “The interest rate announcement is not a surprise, and it will not be a surprise if it reduces spending even more. Inflation is falling, and that is due to a reduction in energy costs, not interest rate rises. The Bank of England is using a blunt instrument based on a recent history of poor forecasting.”