(Alliance News) - Retail sales slumped in the UK in March, data from the Office for National Statistics showed Friday, and came in significantly worse than market consensus.
March's retail sales volumes dropped by 1.4% from the month before, worsening from February's revised 0.5% fall. According to FXStreet, market consensus had tipped just a 0.3% month-on-month fall in March.
ONS director of economic statistics Darren Morgan said: "Retail sales fell back notably in March, with rises in the cost of living hitting consumers' spending.
"Online sales were hit particularly hard due to lower levels of discretionary spending.
"Fuel sales also fell substantially, with evidence suggesting some people reduced non-essential journeys, following record high petrol prices, while food sales continued to fall, dropping for the fifth consecutive month."
The ONS said the largest contribution to the fall came from non-store - meaning online - retailing, where sales volumes fell by 7.9% over the month following a fall of 6.9% in February.
Pantheon Macroeconomics Chief UK Economist Samuel Tombs said: "March's substantial fall in retail sales volumes looks like the start of a period of weakness in consumers' spending, rather than just a blip."
GfK's Consumer Confidence Index fell five points to minus 31 in March as consumers confront a "wall of worry" amid 30-year-high levels of inflation.
It is the fourth month in a row that the survey's headline figure has dropped, to a level last seen in October and November 2020 when Covid numbers were rising.
"The data, together with the further sharp fall in consumers' confidence in April, surely quashes any remaining chance that the MPC might raise Bank Rate by 50bp next month, though a 25bp hike still looks likely," Pantheon's Tombs added.
Despite March's woeful sales performance, volumes were 20% above their pre-coronavirus February 2020 levels.
Food store sales volumes fell by 1.1% in March from February and have fallen each month since November 2021, the ONS noted.
"Higher spending in pubs and restaurants linked to reduced coronavirus restrictions, as well as the impact of rising food prices on the cost of living are possible factors for reduced spending in food stores," the stats body added.
Non-food store sales volumes rose by 1.3% in March from February.
The proportion of retail sales conducted online fell to 26% in March 2022, its lowest proportion since February 2020.
Tombs continued: "Looking ahead, we expect retail sales volumes to fall further over the coming months as the pressure on households' finances from high inflation builds and consumers prioritise spending on services with they forewent during the pandemic. Indeed, households' real disposable incomes look set to fall by about 2% quarter-on-quarter in the second quarter and be about 2.5% lower in this year than last, the biggest drop since records begin in 1947."
By Paul McGowan; paulmcgowan@alliancenews.com
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