Retail gross sales plummet throughout UK as cost-of-living disaster bites

On-line gross sales took a heavy hit final month, with customers reining in pointless purchases because the cost-of-living disaster began to chew, based on official figures.

The Workplace for Nationwide Statistics (ONS) mentioned gross sales volumes fell 1.4 per cent in March – quicker than the 0.5 per cent drop in February – though they continue to be 2.2 per cent above pre-Covid ranges of February 2020.

On-line gross sales bore the brunt, dropping 7.9 per cent within the month – following on from a 6.9 per cent fall in February.

The ONS additionally revealed a lower in gasoline gross sales volumes of three.8 per cent as hovering petrol and diesel prices put motorists off making pointless journeys, the ONS added.

The one a part of the retail panorama to see a rise in gross sales was in non-food shops, which have been up 1.3 per cent, pushed by a 2.6 per cent rise at family items retailers together with backyard centres and DIY shops.

ONS director of financial statistics Darren Morgan mentioned: “Retail gross sales fell again notably in March, with rises in the price of residing hitting shoppers’ spending.

“On-line gross sales have been hit notably exhausting because of decrease ranges of discretionary spending.

“Gas gross sales additionally fell considerably, with proof suggesting some individuals diminished non-essential journeys, following document excessive petrol costs, whereas meals gross sales continued to fall, dropping for the fifth consecutive month.”

The ONS prompt that the autumn in on-line gross sales may very well be because of the finish of lockdown restrictions and customers feeling assured returning to shops, in comparison with December and January because the Omicron variant of coronavirus ran rampant.

It additionally warned that “a number of the fall in February and March 2022 may be linked to affordability issues” and identified that current surveys discovered 54 per cent of adults reported spending much less on non-essentials because of a rise in the price of residing.

Meals retailer gross sales volumes fell 1.1 per cent over the month, with households slicing again on extreme meals purchases because of cost-of-living issues.

The ONS added that the lower was additionally because of extra customers preferring to spend their money on consuming out and socialising because of Covid-19 restrictions coming to an finish.

Economists and analysts prompt extra falls may very well be on the best way, as client confidence takes a knock.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, mentioned: “March’s substantial fall in retail gross sales volumes seems like the beginning of a interval of weak spot in shoppers’ spending, somewhat than only a blip.”

He added that this in all probability means a future Financial institution of England base charge rise is prone to be lower than first thought.

Lisa Hooker, client markets chief at PwC, mentioned: “While we consider there’ll proceed to be pent-up demand for sure classes as we plan for summer season and a return to holidays, the squeeze on incomes will influence spending.

“We’re already seeing shoppers undertake coping mechanisms to take care of the squeeze in incomes, resembling in search of worth and buying and selling down.”

She added: “We’ve got additionally seen extra resilience in spending throughout the older age teams, possibly reflecting that they have been much less impacted by means of lockdown when it comes to funds but additionally are prone to be serving to out their households.”

Oliver Vernon-Harcourt, head of retail at Deloitte, mentioned: “The subsequent few months will see additional disruptions to provide chains and price pressures.

“Customers may also really feel the pinch, notably round discretionary spending, with April seeing the introduction of power value cap rises and nationwide insurance coverage will increase. The retail business might want to stability growing prices with sustaining buyer engagement.”

And Helen Dickinson, chief govt of the British Retail Consortium, mentioned: “The associated fee-of-living squeeze has many shoppers considering twice about main purchases, whereas their expectations of future monetary state of affairs plummeted to lows not seen for the reason that monetary disaster.

“Customers face much more challenges because the power value cap rose to a document excessive this month.”

She added: “Retailers are themselves squeezed between rising prices of operations, exacerbated by the state of affairs in Ukraine, and weaker demand from clients.

“Greater international commodity costs, rising power and transport prices, and a good labour market are all taking their toll. In consequence, it’s possible that retail costs will proceed rise over the course of 2022.”