Retail sales plummet across the UK as the cost of living crisis takes hold Business News

Online sales were hit hard last month, with shoppers curbing unnecessary purchases as the cost of living crisis began to bite, official figures showed.

The Office for National Statistics (ONS) said sales volumes fell 1.4% in March – faster than the 0.5% fall in February – although they remained 2.2% above above February 2020 pre-Covid levels.

Online sales were the hardest hit, dropping 7.9% in the month, after falling 6.9% in February.

The ONS also revealed a fall in fuel sales volumes of 3.8% as soaring petrol and diesel prices deterred motorists from making unnecessary journeys, the ONS added.

The only part of the retail landscape to see an increase in sales was at non-food stores, which rose 1.3%, led by a 2.6% rise at housewares retailers , including garden centers and DIY stores.

ONS Director of Economic Statistics Darren Morgan said: “Retail sales fell notably in March as the rising cost of living hit consumer spending.

“Online sales were particularly hard hit due to lower discretionary spending.

“Fuel sales also fell significantly, with evidence suggesting some people reduced non-essential travel, following record petrol prices, while food sales continued to fall, falling for a fifth. consecutive month.”

The ONS suggested the drop in online sales could be due to the end of lockdown restrictions and shoppers feeling confident to return to stores, compared to December and January when the Omicron variant of the coronavirus raged.

He also warned that “part of the fall in February and March 2022 could also be linked to affordability issues” and pointed out that recent surveys found that 54% of adults said they were spending less on non-food items. essential due to an increase in the cost of living. .

Grocery store sales volume fell 1.1% in the month as households cut back on excessive food purchases amid cost-of-living concerns.

The ONS added that the decrease was also due to more shoppers preferring to spend their money on dining out and socializing due to the end of Covid-19 restrictions.

Economists and analysts have suggested further falls could be on the way as consumer confidence takes a hit.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The substantial fall in retail sales volumes in March looks like the start of a period of weak consumer spending, rather than just a blow. stop.”

He added that this likely means that a future Bank of England base rate hike is likely to be lower than initially thought.

We are already seeing consumers adopt coping mechanisms to deal with income compression

Lisa Hooker, PwC

Lisa Hooker, head of consumer markets at PwC, said: “While we believe there will continue to be pent-up demand for certain categories as we anticipate the summer and a return to the holidays, the squeeze on revenues will have an impact on expenses.

“We are already seeing consumers adopt coping mechanisms to deal with income compression, such as seeking value and lowering prices.”

She added: “We also saw greater spending resilience in older age groups, perhaps reflecting that they have been less impacted by the lockdown in terms of finances, but are also likely to help their families.”

Oliver Vernon-Harcourt, head of retail at Deloitte, said: “The coming months will see further supply chain disruptions and cost pressures.

“Consumers will also feel the pinch, particularly when it comes to discretionary spending, with April seeing the introduction of energy price cap hikes and National Insurance increases. The retail industry will need to find a balance between increasing costs and keeping customers engaged. »

Consumers face even more challenges as energy price cap hits record high this month

Helen Dickinson, British Retail Consortium

And Helen Dickinson, chief executive of the British Retail Consortium, said: “The squeeze on the cost of living is causing many consumers to think twice about major purchases, while their expectations about the future financial situation have dropped to unprecedented lows. seen since the financial crisis.

“Consumers face even more challenges as the energy price cap hit an all-time high this month.”

She added: “Retailers themselves are stuck between rising operating costs, exacerbated by the situation in Ukraine, and weaker customer demand.

“Rising global commodity prices, rising energy and transport costs and a tight labor market are taking their toll. As a result, retail prices are likely to continue to increase during 2022.”