British retail sales posted the biggest quarterly fall in seven years during the first three months of 2017, as rising prices since last year’s Brexit vote started to pressure consumers.
Retail sales volumes contracted 1.4 per cent in the first quarter following a 0.8 per cent rise in the last three months of 2016 according to the Office for National Statistics.
That was the biggest quarterly fall since the first quarter of 2010, and is likely to reinforce the view among many economists that household spending – the main driver of the economy – is now slowing.
The ONS said retail sales were likely to shave around 0.1 percentage points off first quarter economic growth – the first negative contribution of the sector since the last quarter of 2010.
Retail sales volumes during March alone were worse than all forecasts in a Reuters poll of economists.
Sales volumes contracted 1.8 per cent, overturning a 1.7 per cent increase in February.
Alex Marsh, managing director, Close Brothers Retail Finance comments, ‘Retailers have suffered yet another blow when it comes to sales figures. However, despite overall retail sales decreasing we have seen an increased demand for larger purchase items for outdoor activities driven by a mild March. Items which have performed particularly well include motor accessories, camping equipment, garden furniture and golfing goods.
‘To ensure retailers are in the best shape to thrive, rather than just survive, retailers should embrace the direct spending impact the milder weather brings this time of year by offering consumers the chance to also buy complementary goods through flexible payment methods. Spreading the costs can make these purchases more affordable for consumers and allow them to purchase big ticket items in time for Summer.’
Jeremy Cook, chief economist at World First, says, ‘If these poor numbers are a shock then you haven’t been paying attention. The British Retail Consortium’s sales index last week fell by its greatest amount for six years in Q1 as spending on the High St dipped markedly and these numbers are the first quarterly fall for four years.
‘Spending on everything from department stores is lower and viewed through the prism of recent store closures by both Debenhams and Marks and Spencer, the second shoe to drop of the high price, low spending atmosphere has to be further wage compression and rising joblessness in the sector.
‘We used to think that when the going got tough, the Brits went shopping but this retail environment is too much for the hardy British consumer. The weakness in the pound will have afforded some cushioning effects for higher-end retailers who will benefit from tourists hell bent on a deal. For everyone else however the picture is one of weakness. Future surveys will show whether any political fears are hurting consumer sentiment but for now, this is a function of Brexit price rises from the weakness of the pound.’