London - British consumers are likely to have less disposable income this time next year, the boss of one of the UK's largest supermarkets said on Tuesday, casting further doubt on the speed of economic recovery.
Official data and surveys have shown an improving outlook for UK consumer spending, which generates about two-thirds of gross domestic product, but retailers remain wary as inflation continues to outstrip wage rises.
“In 12 months time I think we'll be sitting here saying inflation's running at about 3 percent and average wages have gone up about 1 percent. So net on average a couple of percent out of peoples' incomes,” said Justin King, chief executive of Sainsbury's, the UK's third largest supermarket.
“The reality is whatever happens, I think, in the economic backdrop, we're not going to see a sea change in the amount of money that consumers have to spend,” he told a grocery industry conference.
King said it was an individual's personal circumstances that determined how they felt about the future.
“If they change their view about the future they might start making purchases that require a long term positive view,” he said.
King said that on Friday the Society of Motor Manufacturers and Traders (SMMT) reported the highest number of September new car sales for more than five years.
“It seems to me that's likely to reflect people being a little bit more optimistic about their personal circumstance, keeping a job for two or three years,” he said.
Separately on Tuesday industry data showed growth in British retail sales slowed for a second consecutive month in September.
Last week Sainsbury's met forecasts with a pick-up in quarterly sales driven by growth at local convenience stores and online, outperforming rivals including market leader Tesco. - Reuters