Despite the messages of warning surrounding the economy before the Brexit vote, the economy performed well over the last half of 2016 until now as UK retail sales posted their biggest quarterly fall in seven years in March. UK retail sales posted their biggest quarterly fall in seven years in March.
This bad news came just days after Theresa May’s call for a general election and follows warnings from many that a rise in prices will start to affect retail sales. As prices of everyday goods continue climbing due to a rise in inflation, it was inevitable that consumer spending would eventually slow down as people’s wages start to not go as far as they had previously.
Recent figures from the Office for National Statistics (ONS) show that in the first quarter of this year, sales were down by 1.4% on the preceding quarter. Recent figures from the Office for National Statistics (ONS) show that in the first quarter of this year, sales were down by 1.4% on the preceding quarter. This drop in the volume of sales hit all stores except those selling textiles, clothing and footwear. However the total amount spent in the first quarter was higher than a year ago.
This rise in the amount spent, despite a drop in sales, points to the impact of inflation on goods with average store prices increasing by 3.3%. This is the highest growth in the cost of goods since March 2012.
Kate Davis, senior statistician at the ONS, commented on the findings; “This is the first time we’ve seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors.”
Against all odds, 2016 saw record growth for retail sales figures but the retail sector is now showing signs of slowing down as food and petrol prices rise. As real wages slow and fall below inflation, shoppers are tightening their belts, which alongside the fluctuating value of the pound, is putting a lot of pressure on retailer’s costs.
As more and more households dip into their savings or use credit to buy essential everyday goods or to pay their bills, it is becoming a worry that people are getting into debt just to make ends meet. It is also thought that if inflation continues in its current vein that retail sales will continue to fall with a further drop predicted in Q2.
However, there is good news for online retail sales have risen again, climbing to 19.5% in the year to March and sales are up 0.5% on February. So despite the tough times currently being experienced by retailers, it seems there is a silver lining for online retailers and those selling textiles, clothing and footwear, for now at least.