Business: British Retail Consortium economist gives financial outlook for 2025 including latest on wage growth

As Britain's high streets continue to face mounting challenges, opinion remains divided on how best to breathe life back into these once-bustling hubs.

Harvir Dhillon, Economist at the British Retail Consortium, provides a financial outlook for 2025, including the latest on wage growth, inflation, retailer input costs and people’s spending habits.

He said: “For consumers, wage growth is expected to still be strong-ish, so we've seen some fairly strong wage growth over the past year that has slowed somewhat, but we are still expecting it to bob around the 4% to 6% range, so depending on movements with inflation, and it is likely that following the autumn budget we are going to see a bit more inflation than we otherwise would have seen, so that is likely to impact purchasing power of consumers, and so it might put a bind, or it might put some downward pressure on discretionary spending.

“Now, with retailers, they've had to deal with quite sizeable increases in their input costs, and they're set to face even greater increases. Following the budget, you've got the employer national insurance contributions increase, the national living wage increase coming into effect, this is all going to jack up their input costs by quite a considerable amount, so retailers will of course look to make efficiencies and not just absorb the entire impact.

“So people are doing a lot more spending online than they say would have back in 2019, cast your mind pre-Covid. So before it was roughly one in five items were purchased online, now it's roughly about one in four. I think I'd add a slight nuance there, so it's not just online versus high streets, but we have to look at other different location types, so retail parks are something that is growing in popularity, and so when shoppers do do their shopping physically if you like, they are preferring destinations such as retail parks as compared to high streets, and so we're seeing that grow in popularity, but still a lot of shopping is done physically.”