- Retail sales stalled; consumers shun pricey department stores
- March sales remain stagnant, contrasting with earlier robust performance
- Despite the halt, optimism persists for UK’s economic recovery
Last month, retail sales came to a halt as consumers abandoned department stores in response to price increases.
However, the lackluster performance follows a more robust start to the year, so the sector should still contribute to the United Kingdom’s recovery from the recession.
According to the Office for National Statistics (ONS), March retail sales volumes were unchanged from the previous month.
Prominent high street department stores, including John Lewis, experienced the most significant decline in sales, falling 3.8%.
“Higher prices affected trading,” according to the retailers, as stated by senior statistician Heather Bovill of the ONS.
Although food stores experienced a decline in sales, the High Street witnessed an improvement, as clothing and furniture retailers reported growth due to increased foot traffic. The lackluster performance of retail sales failed to meet the anticipated growth of 0.3 percent as projected by economists.
It is the after increases of 3.7% in January and 0.1% in February.
Lisa Hooker, industry leader for consumer markets at the accounting behemoth PwC, stated, “It is indisputable that many retailers had a disappointing first quarter of the year.”
The initial 2% reduction in National Insurance, which was reflected in January’s pay stubs, and lower inflation have yet to stimulate a sustained recovery in expenditure. Nonetheless, during the initial quarter of 2024, revenue increased by 1.1 percent compared to the preceding quarter. That ought to aid the economy as a whole in its recovery from the recession that gripped the latter part of the previous year, during which the GDP declined for two consecutive quarters.
It is the second quarterly increase in retail volume sales since the commencement of 2022, a time when consumers have encountered a significant strain on their finances due to the rising cost of living.
“Retailers are beginning to see green shoots,” said Ellie Henderson, an economist at wealth manager Investec.
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Alex Kerr, an analyst at Capital Economics, stated, “Although unchanged retail sales volumes in March were below expectations, overall Q1 [first quarter] sales volumes rose, thus ending the retail recession.” Moreover, we continue to believe that rising real household incomes will sustain retail activity through 2024, even as inflation declines.
Inflation fell to 3.2% in March, its lowest level in two and a half years, according to data released separately this week. Chancellor Jeremy Hunt predicted that individuals would “begin to perceive the difference” as a result.
Yesterday, consumer confidence reached its highest level since the third quarter of 2021, according to a survey by Deloitte.
Migrant households find solace in the decline of inflation, which has declined from a four-decade peak of 11.1 percent caused by escalating energy and food costs. This spring, it is anticipated to return to the 2% target set by the Bank of England, which would lead to a reduction in interest rates.
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