Price hikes prompt biggest fall in household spending for 7 years

A STEEP rise in prices has triggered the biggest fall in retail sales in seven years, figures revealed yesterday.

Households have dramatically cut back on spending as the price of goods and fuel has increased at the fastest pace in five years.

According to the Office for National Statistics (ONS), sales in the first three months of the year fell 1.4 per cent compared to the previous quarter. This is the first quarterly decline since 013 and the biggest drop since 010. It is also the second biggest quarterly drop in retail sales recorded since the mid-1990s, prompting one economist to warn that the ‘post-Brexit surge in consumer spending has come to an abrupt end’.

The ONS said the fall in spending was fuelled by a 3.3 per cent jump in prices over the year – the biggest rise since March 01 . PwC adviser Andrew Sentance said: ‘This is the clearest indication yet that the expected slowdown in the UK economy has begun, and we should expect to see this confirmed in other economic data over the next few months.’

Labour MP Chuka Umunna, a leading Remain campaigner, said: ‘The Government’s intention to take Britain out of the single market and customs union is clearly putting our economy at risk of suffering a hard Brexit downturn.’

But John Longworth, who was ousted as boss of the British Chambers of Commerce after backing Brexit, said: ‘Chuka is talking rubbish. We have had stellar growth in retail sales so there was bound to be a correction. As the IMF has said, the economy will continue to grow strongly and the weak pound will provide a huge opportunity for our exporters.’