Hopes of an early Easter boost for the long suffering high street were dashed today when official figures showed retail sales flatlined in March.
The “lacklustre” performance was well below City forecasts of around 0.3% growth and follows a 0.1% rise in February.
Data from the Office for National Statistics (ONS) showed sales volumes at department stores were worst hit, falling 3.8%, a figure that does not bode well for the recovery of John Lewis.
Supermarkets and other food stores were down 0.7%, while online shopping also suffered with sales 1.5% lower.
Analysts pointed out that if a 3.2% bounce in fuel sales is excluded the picture is even weaker with underlying volumes falling 0.3% on the month.
However, there were some brighter spots with fashion and furniture stores seeing rising sales.
The weak figures follow a mediocre Christmas with only strong growth in January providing much cheer for retailers.
Over the first three months of the year as a whole, sales volumes were up 1.9% on the previous three months — but 1.2% below pre-Covid levels.
Today’s figures suggest that economic growth is still weak but probably not so dire as to keep the UK in recession.
In also adds further complexity to the conundrum facing the Bank of England with all the real economy indicators such as unemployment and retail sales heading the wrong way, but wages and prices still rising uncomfortably fast.
Victoria Clarke, UK chief economist at Santander CIB, said: “The rise in sales volumes over the quarter will help the UK with its exit from recession in the first quarter GDP data, which we expect will show a rise of 0.3 to 0.4%.
“But we do not view the economy or the appetite of the consumer to spend as robust. This ‘not too hot, not too cold’ picture is not unhelpful for the Bank of England, as it avoids forcing it to cut sooner than it is ready whilst ensuring that demand is not so strong as to see a new burst of demand-led price rises.”
Danni Hewson, head of financial analysis at brokers AJ Bell, said: “This is a sector stuck in the doldrums and these figures suggest that rather than surging out of recession the economy is once again flatlining. Brands that were already struggling to stay relevant are finding the current climate inhospitable and more holes have opened up on our high streets.”
Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, said: “Shoppers shied away from the high street in March to avoid the prolonged downpour of rain. Unfortunately, the retail sector didn’t benefit much from Mothers’ Day or the early Easter, as consumers prioritised dining out with family and friends rather than gifting.”
But Baker added that “with another National Insurance cut in April and the ongoing improvement of economic indicators, consumers should gradually have more confidence to spend.
