Retail sales suffer ‘worst drop’

UK retail sales values in March fell 1.9 per cent compared to a year ago in what the British Retail Consortium is describing as the worst drop in total sales since it first started collecting figures in 1995.

According to the BRC-KPMG Retail Sales Monitor, Like-for-like food sales fell well below their 2010 level and non-food sales showed an even larger decline.

Consumers’ uncertainty about jobs and incomes, as well as the later Easter, hit both, while big ticket home and furniture purchases suffered most.

“Non-food retailers were particularly hard hit,” says Stephen Robertson, director general of the British Retail Consortium.

“This is strong evidence of the pressure customers and traders are under.

“This year’s later Easter is a factor, but this fall goes way beyond anything that can be explained by that alone.

“Uncomfortably high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for 30 years.

“Mounting fuel and utility costs, falling house prices, higher VAT and the prospect of more tax rises and job losses left people unwilling to spend unless they really had to.

“These pressures aren’t going away and the arrival of higher National Insurance is likely to compound them in the immediate future.”

Robertson adds: “The next interest rate decision is a difficult balancing act for the Bank of England, but for now supporting our weak economy must be the priority.

“Inflation is coming mainly from temporary and external price shocks – VAT, world commodity prices and the weak pound – not wage or consumer driven increases. Increasing interest rates would do more harm than good.”

Helen Dickinson, head of retail at KPMG, says: “We have seen an emergence of new, lower spending patterns since the middle of January, which are currently continuing to trend downwards.

“Many retailers will not be able to sustain this ongoing weakness in demand beyond the short term and are hoping for some good news around the extended bank holiday period and a feelgood factor driven by the royal wedding.

“However, as disposable income continues to fall, without reducing saving or increasing borrowing – which would oppose current trends – this will not be possible.”

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