Record-breaking sunshine in March gave Britain’s retailers a surprise boost as retail sales volumes rose by 0.4 per cent during the month, according to the Office for National Statistics (ONS), defying the economic forecasts.
The figure was a slowdown, however, from February’s 0.7 per cent increase, which itself was revised down from an initial estimate of 1 per cent.
The better-than-expected performance was driven by consumers refreshing their wardrobes and sprucing up outdoor spaces as unseasonably warm and sunny weather encouraged spending. The rise was partly offset by weaker supermarket sales, as more people dined and drank outside their homes.
Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, comments:, “Glimpses of warmer weather and improving consumer confidence meant retail sales continued its upward trend in March, helped by clothing, gardening supplies and DIY goods.
'Sales volumes rose for the third consecutive month, reaching their highest level since July 2022. The first quarter of 2025 suggests consumer spending is slowly starting to return, which should provide some reason for optimism in the retail sector.
“April’s increase in National Minimum Wage will also mean consumers have more money in their pocket which should feed through to increased spending. Plus, with mortgage completions surging ahead of the stamp duty deadline, household goods and homeware could be set for a boost.
“Unfortunately, this good news for retailers might not be enough to offset the significant headwinds of rising employment costs and uncertainty surrounding tariffs.
"This additional layer of uncertainty will impact purchasing decisions, future supply chains and place further pressure on already squeezed margins.
'It’s clear retailers need support – whether that be the return of tax-free shopping or a permanently lower level of business rates – but until then, it’s crucial they monitor the tariff situation closely and future proof their supply chains during the 90-day pause.”
Thomas Pugh, economist at RSM UK, added, “The third consecutive monthly rise in retail sales volumes in March confirms that consumers returned to stores in the first quarter of this year.
"However, the world has changed since March with the announcement of US tariffs and the associated huge increase in uncertainty. Indeed, consumer confidence dropped by four points in April.
“Households remain in a good place to ramp up spending with the savings rate extremely elevated and real wages rising. But the drop in consumer confidence suggests that households’ saving will remain elevated. What’s more, retail prices excluding fuel rose by just 0.8 per cent y/y in March, which will have helped sales volumes.
"But that is unlikely to last with the retail sector particularly affected by the significant increase in employment costs which came into effect this month. The combination of lower confidence and rising prices will be a significant headwind to further sales volumes growth.”
