Retail sales stagnate despite easing inflation

UK retail sales stagnated in March representing the first time that sales have not grown in monthly terms since December, official data showed Friday.

Economists polled by Reuters had expected sales growth of 0.3 per cent in March. February has seen a modest growth of just 0.1 per cent, revised up from stagnation.

While spending on motor fuel and non-food goods rose, by 3.2 per cent and 0.5 per cent, respectively, this was offset by falls in food stores and online retailers of 0.7 per cent and 1.5 per cent, with increased prices affecting consumer spending habits, the Office for National Statistics said.

Earlier this week, ONS reported a fall in inflation in March, with the Consumer Prices Index dropping to 3.2 per cent, the lowest level since September 2021.

Looking at the quarter, sales volumes increased by 1.9 per cent in the three months to March 2024 when compared with the previous three months. This was following low sales volumes over the Christmas period for retailers.

"Retailers had a gloomier March than many expected, and overall sales remain 1.2 per cent below their pre-covid peak,” Nicholas Hyett, Investment Manager at Wealth Club, commented.

“Department stores remain an area of particular weakness, not good news for John Lewis which announced it would not be paying its regular staff bonus for the second year in a row during the month. However, high street shops more broadly have actually performed better, it's food retail and online shopping that have held back growth.

The disappointing numbers will fuel speculation that the Bank of England will consider interest rate cuts this summer, though are not poor enough to necessitate a move. It leaves the UK a little limbo once more.”