British Retail Sales Dropped More Than Expected In March — And It Is A Worrying Sign For The Economy

REUTERS/Luke MacGregor
LONDON — UK retail sales declined significantly in March, and in the three months to the end of March, signalling further trouble for Britain's consumer sector, according to data from the Office for National Statistics on Friday morning.

On a three-month basis, sales dropped 1.4%, marking what the ONS called "the third consecutive decrease for the underlying 3 month on 3 month pattern." On a month-to-month basis, sales dropped more than forecast, slipping 1.8%, compared to an expected 0.2% fall.

"Today's retail sales figures show a decline on the month and on the three months to March, which coincides with quarter 1 in 2017. 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," Kate Davies, a senior statistician at the ONS said.

Here is the ONS' chart showing the data as part of the longer term trend:

Office for National Statistics

No single sector drove the decrease in sales, with the ONS noting that: "Decreases in quantity bought were seen across all retail sectors except textile, clothing and footwear stores where sales volume increased by 1.9%, thus having the only positive contribution to overall growth.

"The largest decreases were seen in household goods stores and fuel stores at 3.3% and 3.1% respectively."

One of the biggest drivers of the country's slowing retail sales is the huge rise in inflation seen in the UK since Britain voted to leave the EU last summer. That sent the pound tumbling, and in turn pushed up inflation.. Inflation stood at 2.3% in March, with food and drink the biggest contributor to price rises.

"These latest retail sales figures show that the post-Brexit surge in consumer spending has come to an abrupt end," former Bank of England MPC member and senior economic adviser at PwC said in an emailed statement.

"This is the clearest indication yet that the expected slowdown in the UK economy has begun, and we should expect to see this confirmed in other economic data over the next few months."

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