UK retail sales fell an unexpected 0.3% in February as online sales dipped and bad weather kept people away from the high street.
According to the Office for National Statistics (ONS) on Friday, sales volumes came in well below the 0.6% rise forecast by economists.
Businesses that predominantly trade online saw a sharp 4.8% decline during the month, following strong performance over the festive and New Year period.
However, despite the fall, online volumes in February were still 33.2% above their pre-coronavirus February 2020 levels.
“Food sales dipped with significant falls for alcohol and tobacco stores as more consumers went out to pubs and restaurants,” Heather Bovill, ONS deputy director for surveys and economic indicators, said.
“More socialising as well as many of us returning to the workplace meant a good month for clothing and department stores with people looking to expand their wardrobes.
Non-food stores sales volumes rose by 0.6% last month, with a 13.2% growth in clothing and 1.3% rise in department stores.
Household goods and many other stores also reported a decrease, with feedback suggesting February’s stormy weather could have had an impact on sales. The UK was hit by three storms in February, Dudley, Eunice and Franklin.
Meanwhile, increased travel after the easing of England’s Plan B restrictions at the end of January drove fuel sales above their pre-pandemic level for the first time. Automotive fuel sales volumes rose by 3.6% during the month.
“2022 has got off to a mixed start for retailers, and things will soon get tougher. Though COVID cases have been on the rise again of late, this doesn’t appear to be discouraging consumers from engaging in social consumption activities,” Martin Beck, chief economic advisor to the EY ITEM Club.
“We now expect inflation to average well over 6% this year and, with this week’s Spring Statement offering limited support, there is still likely to be the biggest squeeze on household finances for more than a decade.
“Some households may be able to dip into savings accumulated during the pandemic, but many won’t have that luxury. So, retail demand is likely to come under increasing pressure as we move through 2022.”
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Lisa Hooker at PwC also warned that the decline in real incomes will hurt retailers in the year ahead.
“This week’s inflation figures saw a sharp increase in food prices which will inevitably eat into consumers’ ability to spend on discretionary items going forward. So February’s bump up in fashion sales as shoppers looked for new outfits to go back to the office may not last,” she said.
“As Britons are forecast to face the largest fall in disposable income in recent times, and with limited targeted help from the Chancellor in the recent Spring Statement, retailers’ annus horribilis may yet be ahead of them.
It comes as consumer confidence continued to nosedive in March as UK households face a sharp cost-of-living squeeze amid soaring inflation and rising energy, food and fuel prices.
According to GfK’s consumer confidence barometer, consumer confidence in Britain fell a further five points to -31 during the month, with all measures down compared to February.
It was the fourth month in a row that confidence had dropped, falling back to a level last seen in October and November 2020 when COVID numbers were rising.
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