Achi news desk-
The seasonally adjusted figures published yesterday by the Office for National Statistics showed that, compared to the first quarter with the last three months of last year, total retail sales increased by 1.9%.
The ONS said this follows “low sales volumes for retailers over the Christmas period”.
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Comparing the first quarter with the opening three months of last year, the number of retail sales was up 0.4%.
Danni Hewson, head of financial analysis at stockbroker AJ Bell, said: “Households have become more willing to turn to their personal finances over the past two years as the cost of living crisis stretches budgets to the limit. Inflation may have cooled significantly and the first of those national insurance cuts have hit workers’ pay packets, but people are still feeling the pinch.”
There was considerable variation in the performance of different retail sub-sectors in March.
Grocery was weak, with grocery store sales numbers down 0.7% month on month. The non-store retail category, which includes online shopping, showed a 1.5% drop in sales volume between February and March.
The number of motor fuel sales increased by 3.2% month on month. And, in the non-food store category, the number of sales rose by 0.5%.
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Lisa Hooker, industry leader for consumer markets at accountancy firm PwC, said: “What is clear is that the first quarter of the year has been disappointing for many retailers. Lower inflation and the first [two percentage point] A cut to national insurance felt in January’s pay packets has yet to translate into a sustained recovery in spending.”
Ms Hooker added: “Grocery fell back a bit. While supermarkets benefited from the earlier Easter, the warmer weather and extra bank holidays encouraged more consumers back into hospitality with a stronger performance from restaurants and pubs. Easter chocolate sales were subdued with the impact of chocolate price inflation… “Online penetration was also flat, with the wet weather easing and more shoppers venturing back to the high street and indoor shopping centers , with more visitors over the bank holiday weekend.”
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However, she highlighted her belief that “March retail sales figures should always be taken with a pinch of salt, as the ONS tries to adjust for the impact of an earlier Easter”.
And Ms Hooker added: “Going forward, we are hopeful that the picture will improve from April onwards, especially if inflation hits the Bank of England’s target of 2% as many economists predict. The psychological effect of that, along with increases in [the] A national living wage, state pension and benefits, together with the second cut in national insurance, could give tired consumers the money they need to start spending again, after a slow start to 2024.”
Andrew Goodwin, senior economic adviser to the EY Club think tank ITEM, said: “Sales increased by 1.9% in Q1, after a 1% fall in Q4 2023. Retail sales data is extremely volatile, and noise is undoubtedly exaggerating the extent to which the performance of the retail sector has improved in Q1. That said, the EY ITEMS Club thinks we are clearly past the trough in terms of consumer demand and activity more broadly, with the benefits of the significant fall in inflation and recovery in real wages beginning to emerge.”
He added: “Retail sales were flat in March, following gains in the previous two months. Fortune varied significantly across different sectors, with food sales falling back and a significant month-on-month drop in the non-shops sub-sector, but there were big gains for non-food sales and, in particular, fuel sales .”
