Retailers saw sales drop
(Picture: PA Archive)RETAIL sales are down and consumer confidence has nose-dived, the latest official figures show, a sign of worse to come say City economists.
Shop sales fell 0.3% in February, with alcohol and tobacco purchases notably down.
While that was partly down to people heading back to pubs and restaurants it still seems a harbinger of what is expected to be a tough year for retail.
With inflation biting, UK consumer confidence fell for the fourth month running. The GfK consumer sentiment index fell by five points to minus 31 in March.
Joe Staton, at GfK, warns there is an “unmistakable sense of crisis in our numbers”.
He added: “Confidence in our personal financial situation and in the wider economy are severely depressed while the daily news of unimaginable suffering from a horrifying war in Europe and rising COVID numbers at home is adding to the bleak mood. The outlook for consumer confidence is not good; it’s certain there’s more bad news to come.”
On the retail sales, Capital Economics said: “The small decline in retail sales volumes in February is not as bad as it seems, with most of the fall driven by the temporary impact of Storm Eunice and the shift in spending to non-retail activity. That said, with the coming months set to bring further rises in both inflation and interest rates, it is hard to see how overall consumer spending growth will make much headway over the remainder of this year.”
A Spring statement this week from the Chancellor was not well received, adding to the sense that tough times are coming.
A cost of living squeeze not seen for 50 years is widely predicted.
“Consumers face a rocky road ahead, with rises in the energy price cap and NI contributions both coming next week. Meanwhile confidence has been knocked by the continued rise in inflation, as well as the uncertainty created by the situation in Ukraine. While the Chancellor’s Spring Statement offered some relief for consumers, rising inflation and next week’s rise in the energy price cap mean that real discretionary incomes are likely to fall in the coming months, as the cost of living soars.”
Emma-Lou Montgomery, associate director at Fidelity International said: “We face an increasingly tricky financial situation, with rising costs meaning it is going to have to be necessities over ‘nice to haves’ for months to come. And there is little end in sight.”
