Shares in Tesco PLC (LSE:TSCO), the UK's largest supermarket group, and rival J Sainsbury PLC (LSE:SBRY) were barely moved in early trading on Friday despite official data showing retail sales tumbled at their fastest rate in almost a year.
The muted reaction comes against a backdrop of mounting political pressure on the sector, with the Treasury pushing major supermarkets to voluntarily cap prices on staples such as eggs, bread and milk in exchange for regulatory relief.
The British Retail Consortium has branded the proposals "1970s-style price controls" and warned the government should instead focus on reducing the public policy costs pushing up food prices.
Chancellor Rachel Reeves is also bringing forward new anti-profiteering powers for the Competition and Markets Authority, including the ability to name and shame firms judged to have widened margins during the crisis.
The Office for National Statistics said the total volume of retail sales fell by 1.3% in April, the largest drop since May 2025 and more than double the 0.6% decline forecast by economists.
The figure followed a 0.6% rise in March, which was revised slightly lower.
A sharp 10.2% fall in motor fuel sales volumes drove much of the decline, the largest drop in that category since November 2020.
Retailers said motorists made fewer journeys and delayed filling up in the face of high prices, after a spike in March when drivers stocked up following the outbreak of the Middle East conflict.
Petrol prices this week hit their highest level since the conflict began, at 158.52p per litre, up 19.3% since the war sparked a rise in crude oil prices, while diesel is 30.6% higher.
Excluding fuel, sales volumes still fell 0.4% for the month.
Clothing retailers reported a 2.4% decline, blaming variable weather, lower demand and consumer sensitivity to prices.
Online retail platforms also saw weaker demand during the month.
Grant Fitzner, the ONS chief economist, said retail sales had increased over the three months to April, with strong and sustained performance from beauty product stores and computer and technology shops.
Harvir Dhillon, economist at the British Retail Consortium, said concerns over the Middle East conflict and its impact on living costs were leading shoppers to rein in spending.
Jacqui Baker, head of retail at RSM UK, said consumers had pulled back as the conflict continued to drag on sentiment, though health and beauty offered a glimmer of hope as shoppers indulged in small, feel-good luxuries.