Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

When the Brexit surprise hit, Britons did what they typically do when life gets tough: they shopped.

But now that post-referendum reality is starting to bite, there is mounting evidence that they're reining in spending. Further confirmation could come over the next 48 hours, when several big store chains, including Next Plc, report annual earnings, and the Office For National Statistics releases its retail sales figures for February.

On Tuesday, the ONS said the inflation rate rose to 2.3 percent in February, up from 1.9 percent in January. That is broadly in line with wage growth, so the long-expected squeeze on real incomes is here.

Discretionary Doldrums
U.K. families' slowing discretionary income growth is a bad sign for retailers
Source: Asda

There are certainly signs that this is prompting shoppers to pull in the purse strings. Furniture retailer ScS Group Plc said Tuesday that February was "challenging," largely driven by fewer customers visiting its stores. That could be a sign of worse to come, as big-ticket items such as sofas are likely to be one of the first areas to be hit by any penny pinching (they're also the first to benefit as bad times end and spending power grows, as happened with the last recession). Home improvement retailer Kingfisher Plc will say on Wednesday how its kitchen and bathroom sales are holding up.

Discounting Drama
The return of U.K. clothing deflation threatens retailers' margins
Source: U.K. Office for National Statistics

ONS data also show a return of clothing deflation, which implies that retailers are still having to discount heavily to shift stock. Indeed, the high street is awash with mid-season sales and special offers. That is going to make it difficult for store chains to raise prices, not a comfortable place to be when sourcing costs are escalating. Next may point to continuing tough conditions when it reports on Thursday.

On Sale
Discounting on the high street has ticked up over recent weeks
Source: RAH Advisory

It's not all bad news for Britian's shops. While food prices rose in February for the first time in three years, that can actually boost the sales growth of supermarkets. And ScS said it's seen some improvement in customer traffic since the beginning of March.

Spending has held up remarkably well since the vote to leave the European Union. But we now may be seeing the first signs that shoppers' resolve is starting to waiver.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Andrea Felsted in London at

To contact the editor responsible for this story:
Jennifer Ryan at