The British Retail Consortium [BRC] has said that sales growth in March slowed compared to the previous two months of the year.
Its statistics show that sales grew by 3.1 per cent last month, compared with a 6.7 per cent rise during February.
Compared to March 2021, the BRC-KPMG retail sales monitor indicated that sales were down 0.4 per cent. Year-on-year food sales also decreased and online sales for non-food items plunged by 29 per cent, in contrast with 64.7 per cent growth last March.
The slowdown came as households began to brace themselves for higher energy bills and taxes from April, which alongside the war in Ukraine had “shaken consumer confidence” according to the BRC. Inflation has also been forecast to hit 8.7 per cent in the final three months of the year.
BRC chief executive Helen Dickinson said that the “enormous challenge” facing consumers financially would “likely be reflected in retail spend in the future”.
Online fashion retailer Asos is among the larger businesses in the sector warning of uncertainty around its sales forecasts over the coming months, with the full effect of the household budget squeeze on consumer spending yet to become known.
Meanwhile, many businesses that are having to weather a drop-off in sales are simultaneously having to contend with higher operating costs due to increased energy bills and National Insurance, and therefore having to weigh up whether to raise prices.
Don Williams, retail partner at KPMG, said: “Retailers are facing their own battle with rising costs and inflation and are walking a tightrope between absorbing rising costs themselves or passing these on to consumers.”
Williams added that it was unclear at this point in time whether a trend would develop of consumers physically buying less over the coming months, as households will likely be forced to rein in spending.
Photo by Annemarie Grudën on Unsplash
