UK retail sales dropped sharply in March as the rising cost of living hit consumer spending, according to official data out today.
The volume of retail sales fell far more than predicted, with online sales hit particularly hard, as consumers reined-in discretionary spending on luxuries and other non-essential items. Why? Because as prices of food and fuel have sky-rocketed, buying the basics now takes up an ever-rising share of household incomes.
UK retail sales fell no less than 1.4% in March, compared to the previous month. Within that total, on-line sales were hit particularly hard falling7.9% compared to February, as consumers tightened their belts
These downbeat numbers are a clear sign high inflation is translating into a serious economic slowdown. And, as the cost-of-living squeeze gets tighter, with household energy bills rising in April, and tax rises kicking in, retail sales are likely to fall much more.
Separate data from research company GfK suggests that, while retail sales fell in March, so far in April, consumer confidence has plunged to its lowest level since the 2008 financial crisis.
But there is one bit of good news – for those with a mortgage anyway. Because this retail slowdown and consumer confidence dive means the Bank of England – which rose from 0.5 to 0.75% last month, may hesitate before pushing up rates more.
The question remains, though. UK retail sales volumes are falling sharply, and are set to go down even more.