UK retail figures fell at the fastest rate in seven years in the first quarter of the year, as inflation continued to impact consumer spending.
According to the latest Office for National Statistics (ONS) figures, sales volume dropped 1.4 percent for the first quarter, marking the biggest fall since 2010. This was largely attributed to rises in prices of goods, with the effects of inflation beginning to take effect upon the British economy.
Kate Davies, senior statistician at the ONS, commented: “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.”
This marks a significant drop from the strong figures of February, when sales figures were up 1.7 percent, suggesting that continued consumer concerns over Brexit uncertainty and rising inflationary levels have started to reflect upon spending habits.
Alongside ongoing Brexit negotiations, Tuesday’s decision by the government to announce a snap election has created further uncertainty for the UK, prompting additional volatility for the pound across currency markets.
Ian Gilmartin, head of retail and wholesale at Barclays (LON:BARC), commented on the figures: “A difficult month for retailers in March, with the impact of price rises taking a bite out of consumers’ willingness to part with their cash.”
He added: “It’s important not to overstate the severity of the figures, as the sector was still able to post monthly year-on-year growth and there were other bright spots, with clothing retailers posting good results boosted by a milder than usual March. The late Easter this year may also have slightly disrupted sales patterns, but the overall trend does suggest that it’s going to be a tricky time for the wider industry as we move towards the summer season.”
Elsewhere across the continent PMI figures for the Eurozone were encouraging, with France exhibiting strong growth alongside more moderate figures from Germany.
In France, the combined manufacturing and services sector index stood at 57.4 for April, as opposed to 56.8. This proves encouraging for the French economy, in spite of mounting political uncertainty with regards to the upcoming presidential elections on May 7th.
Conversely, for Germany the headline composite index for Germany fell to 56.3 in April from 57.1 in March.