Consumers 'abandon non-essential spending'

More people in the UK are tightening their belts financially and cutting back on non-essential shopping as the economic conditions impact on households.

The latest Distributive Trades survey from the Confederation of British Industry found that 61 per cent of retailers reported sales in July as being lower than a year ago.

It is expected that conditions will be similar in August, with a forecasted 33 per cent fall, impacting most upon items such as electrical goods and clothing.

Richard Dodd, spokesperson for the British Retail Consortium, said there is no indication of improvement as pressure on people's finances is likely to be here to stay.

"Conditions are very tough for customers and therefore, [they are tough for] retailers," he commented.

"Customers are very short of spare cash and are reluctant to spend on anything other than essentials … because they are nervous about how conditions are going to shape up."

Interestingly, leather retailers and shoe shops, along with supermarkets, were the only sectors to report growth in sales, suggesting that people may be making more investment purchases than high-fashion ones.

Retailers often measure the state of the economy by proxy via lipstick sales - when conditions are tight, lipstick sales sales increase as women boost their mood with inexpensive lipstick purchases instead of, for example, £100 shoes.