LONDON British consumers are cutting back on non-essential spending as the impact of last year's Brexit vote pushes up the cost of their day-to-day shopping, two surveys showed on Tuesday.
In a fresh sign of caution among consumers - who helped the economy withstand the Brexit shock last year - the British Retail Consortium industry group and Barclaycard reported signs of weakening demand for more expensive items.
"The persistent weak sales performance of several non-food categories points to an undeniable trend of cautious spending on non-essential items," BRC chief executive Helen Dickinson said.
Over the three months to February, total non-food sales fell by 0.2 percent, the first fall over a three-month period in more than five years, the BRC said.
The spending power of households is being stretched by the fall in the value of the pound since Britain's referendum decision in June to leave the European Union and by a rise in global oil prices.
Inflation has risen to nearly 2 percent and many economists think it will hit 3 percent this year.
An official measure of retail sales showed a surprise fall in volumes in January. Car sales to individuals fell by more than 4 percent last month and media groups such as broadcaster ITV have said retailers and other companies are cutting back on advertising to lower their prices and counter rising inflation.
British finance minister Philip Hammond is due to announce an annual budget statement on Wednesday and has signalled he will keep money in reserve in case the economy needs help to get through a slowdown in the economy as Britain leaves the EU.
The BRC said total sales rose in value terms by 0.4 percent in February compared with the same month last year, stronger than a 0.1 percent increase in January but below the 12-month average of 0.9 percent.
On a like-for-like basis - which excludes new store openings - sales fell by 0.4 percent, a slightly smaller fall than January's decline of 0.6 percent but the first back-to-back two-month dip since March and April last year.
Economists taking part in a Reuters poll had expected like-for-like sales to rise by 0.2 percent.
Barclaycard said its survey showed the biggest rise since at least 2012 in spending on essential items which pushed up its measure of consumer spending by 4 percent. But growth in spending on non-essentials slowed for a fifth consecutive month.
Spending at department stores and on electronics fell by around 5 percent, Barclayard said.
The Bank of England is watching closely to see if households rein their spending as it weighs up whether the economy needs more monetary stimulus to spur demand or an interest rate hike to curb inflation.
(Reporting by William Schomberg; editing by Andy Bruce; ((firstname.lastname@example.org; +44 20 7542 7778)))