Economy

UK retail sales fall as online spending drops and fuel prices take toll

Worries grow over accelerating inflation

A shopper on Regent Street in central London. British retail sails fell last month. Photograph: Hollie Adams/Bloomberg

Fri Mar 25 2022 - 10:53

British retail sales unexpectedly fell in February as online shopping sank back to its levels at the start of the Covid-19 pandemic and surging fuel prices took up a bigger chunk of household budgets, official data showed on Friday.

Sales volumes were down by 0.3 per cent from January, the Office for National Statistics said.

Economists polled by Reuters had on average forecast a 0.6 per cent monthly rise in retail sales.

Excluding automotive fuel, which rose in price in February as tensions between Russia and Ukraine escalated, sales fell by a sharper 0.7 per cent.

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Inflation

Retailers fear a tough remainder of the year as inflation accelerates from levels that are already their highest in 30 years. The government’s budget watchdog thinks the consumer price index, which hit 6.2 per cent in February, will go close to 9 per cent.

A poll published earlier on Friday showed British consumer confidence in March sank to levels last seen in late 2020 due to worries about inflation, higher interest rates and the war in Ukraine.

The ONS said sales volumes last month were 3.7 per cent above their pre-coronavirus levels of February 2020 but the share of online sales in value terms was its lowest since March 2020 at 27.8 per cent.

Volumes

The fading of the wave of Omicron coronavirus cases hit spending on food - down 0.2 per cent on the month - as people returned to pubs and restaurants but the increase in socialising and returning to workplaces led to a 13 per cent leap in clothing sales.

Similarly, volumes of fuel bought surpassed their pre-pandemic levels for the first time after the lifting of coronavirus restrictions, the ONS said.

Household goods stores saw a 2.5 per cent drop in sales and some retailers suggested stormy weather last month impacted footfall.

Compared with a year earlier, overall sales volumes were up by 7.0 per cent, short of the 7.8 per cent growth expected in the Reuters poll. – Reuters

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