United Kingdom retail sales fall sharply in March

Consumers In The Christmas Eve Retail Rush

New figures released by the Office for National Statistics (ONS) today showed that on a three-month basis from January to March, sales dropped 1.4 per cent, which the ONS called "the third consecutive decrease for the underlying 3 month on 3 month pattern".

United Kingdom retail sales volumes contracted 1.4% in the first quarter after rising 0.8% in the last three months of 2016, the Office for National Statistics said.

At the same time average store prices were up 3.3% compared to the same period previous year, the largest growth since March 2012 - led by petrol stations.

Retail sales performed much better than expected in the immediate wake of last June's Brexit vote, helping to boost overall GDP growth and confounding widespread expectations that the economy would fall into recession.

Its measure of retail prices rose 3.3% in March compared with a year ago, the biggest such increase in five years.

Kate Davies, senior statistician at the ONS, said prices were rising across the board.

The ONS said retail sales were likely to shave around 0.1 percentage points off first quarter economic growth - the first negative contribution of the sector since the last quarter of 2010.

'This is the clearest indication yet that the expected slowdown in the United Kingdom economy has begun, and we should expect to see this confirmed in other economic data over the next few months'.

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"This is the first quarter in 2-3 years where we have seen a clean beat supported by sales upside and strong cash generation". The firm had revenue of $9.99 billion for the quarter, compared to analyst estimates of $10.15 billion.

ING's senior United Kingdom economist James Knightley called the figures "dreadful". He said: "The story for the household sector isn't great right now".

It follows separate official figures last month that showed wage growth had slipped down to the rate of inflation, meaning the real terms value of pay for households is not going up. "Families are facing the fastest rise in living costs for over three years and they are reining in their spending rapidly".

The squeeze on household spending power threatens to derail the strong consumer activity that has helped keep the economy on course since the referendum. Marks & Spencer also said it would close six stores. Sales were forecast to fall moderately by 0.5%.

But retail sales fell sharply in the first three months of the year, that was the first quarterly decline since 2013.

One of the biggest drivers of the country's slowing retail sales is the huge rise in inflation seen in the United Kingdom since Britain voted to leave the European Union last summer.

They shrank by 1.8 percent, after a 1.7 percent increase in February. "When comparing March 2017 with March 2016, internet sales in textile, clothing and footwear stores have increased by 28.1% - the largest year-on-year increase since August 2014", it said.

Volumes in non-food stores declined by 1.3 per cent and in non-specialised stores, including household goods vendors, by 2.4 per cent.

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