UK retail sales fell sharply in March as consumers cut back on food and petrol as prices soared.
The result was worse than expected, with overall sales volumes down by 1.4% compared to forecasts of a 0.3% decline.
The February figure was revised down from a fall of 0.3% to 0.5%, said the Office for National Statistics.
"Food store sales volumes fell by 1.1% in March 2022 and have fallen each month since November 2021; higher spending in pubs and restaurants linked to reduced coronavirus restrictions, as well as the impact of rising food prices on the cost of living are possible factors for reduced spending in food stores," the ONS said.
"Automotive fuel sales volumes fell by 3.8% in March 2022 with other data sources indicating that some non-essential road travel had been reduced following record high petrol and diesel prices."
But the biggest fall came in non-store retailing, including online shopping, down 7.9% over the month following a fall of 6.9% in February as consumers curtailed discretionary spending.
Retail sales volumes fell 1.4% in March, with the biggest driver coming from ‘non-store retailing’ (including online shops), which fell 7.9%.
However, retail remains 2.2% above its pre-pandemic level https://t.co/q4w0Tx8mQk pic.twitter.com/fyBUF1mnmI
— Office for National Statistics (ONS) (@ONS) April 22, 2022
Darren Morgan added⬇️
— Office for National Statistics (ONS) (@ONS) April 22, 2022
Government High Streets Task Force member and ShopAppy founder, Dr Jackie Mulligan said: “For countless small independent retailers, March was merciless. The thousands of small high street businesses we work with said it was extremely challenging last month and this data reflects that. Inflation is really starting to take its toll on people's finances and that is rapidly impacting sales on the high street."
Adding to the gloomy mood, consumer confidence fell sharply in April according to the latest report from analysts Gfk.
Its index dropped by 7 points, from -31 to -38, much worse than forecasts of a figure of -33. This is the lowest level since the 2008 financial crisis
Joe Staton, GfK's client strategy director, said: "This is dire news for consumer confidence and with little prospect of any economic relief on the horizon we can only forecast further falls in the index for the year ahead”.
The pound has slipped back as the weak figures increase uncertainty over Bank of England rate rises.
Against the dollar, sterling is down 0.83% at US$1.2914.
Michael Hewson, chief market analyst at CMC Markets UK, said: "Today’s numbers could ..play into the calculus around next month’s Bank of England rate decision with the prospect that we could get a split between those members who may want to go down the 50bps rate hike route, and those who would prefer to hike by 25bps. The central bank is facing an unenviable task this summer, facing an inflation problem that it is behind the curve on, and having to consider raising rates further into the teeth of an economic slowdown...
"Until we get some further clarity on what the Bank of England might do next month in terms of outlining a policy response, the pound could well remain under pressure, with the recent lows... likely to give way to a potential move towards US$1.2800. This has become much more likely given the perception that the Federal Reserve seems more determined to squeeze down on inflation much harder."