UK retail sales slump 1.4% as prices climb
RETAIL sales suffered their biggest quarterly fall in seven years as rising prices at the checkouts and petrol pumps forced shoppers to curb their spending.
The Office for National Statistics said the volume of goods sold in shops and online fell by 1.4 per cent in the three months to the end of March, the first quarterly decline since 2013 and the steepest drop since 2010.
March sales were down by 1.8 per cent from the previous month as average store prices increased by 3.3 per cent on the previous year, the steepest rise since March 2012.
The only positive contributions came from clothing, footwear and textiles, where the amount of goods purchased increased by 1.9 per cent driven by a 28.1 per cent surge in online sales from the previous year.
The biggest decreases were in household goods and fuel at over 3 per cent.
Economists suggested the consumer spending squeeze could lead to UK economic growth slowing to 0.4 per cent in the first quarter compared with 0.7 per cent over the previous three months.
Consultancy Retail Economics chief executive Richard Lim said: “This latest data shows that the surge in inflation is putting retailers under intense pressure.
“Families are facing the fastest rise in living costs for over three years and they are reining in their spending rapidly. We’re concerned for the outlook for the retail industry given the toxic mix of rising operating and sourcing costs against a backdrop of weaker consumer demand and heightened political and economic uncertainty.”
ING senior economist James Knightley said: “Inflation is eating into household spending power with wages once again failing to keep pace with the rising cost of living. There is also a growing sense of job insecurity highlighted in some surveys, which may also be making households a little nervous.
“We have to also look at where the spending has been generated and there is evidence that credit cards and running down of savings has been helping support spending since the June EU referendum. Maybe households are becoming more wary here too.”