The latest data released by the British Office for National Statistics (ONS) reveals that retail sales in the UK remained stagnant in March 2024, marking the first time since December last year that there has been no growth (0.0%) on a monthly basis, despite a recent easing in inflation.
The monthly figure of 0.0% growth was lower than economists had anticipated, with expectations of a 0.3% increase in March following a 0.1% rise in February.
According to the ONS, sales at non-food outlets saw an increase, with automotive fuel sales experiencing the most significant rise since May 2022. However, these gains were offset by declining sales at food stores, online retail platforms, and other non-storefront retail establishments.
Excluding fuel sales, retail sales in the UK actually fell by 0.3% in March.
Lisa Hooker, industry head for consumer markets at PwC, commented on the disappointing first quarter for many retailers, noting that despite salary increases in January, consumer spending has yet to show sustainable recovery.
In an effort to stimulate spending, British Finance Minister Jeremy Hunt announced a reduction in social security taxes for the second time in April, following the initial reduction in January. This move is aimed at bolstering support for the Conservative Party, the current governing party, in the upcoming elections.
Despite the overall stagnation in retail sales, there have been positive signs from leading British retailers. Tesco, the largest supermarket chain in the country, and clothing retailer Next have both reported improving consumer trends and expect profits to grow in 2024. However, home decoration retailer Kingfisher issued a warning regarding its profits, although it noted better performance in England compared to France.
On a year-on-year basis, ONS data shows that retail sales in March saw a modest increase of 0.8%.
Looking at the quarterly performance, UK retail sales in the first quarter of 2024 (January-March) grew by 1.9% compared to the previous quarter, marking the highest growth rate since mid-2021, largely driven by strong sales growth in January.
Following the publication of retail sales data, the pound briefly weakened against both the US dollar and the euro.