UK March Retail Sales Decline 1.8%, Prices Continue To Increase

Headline UK retail sales volumes declined 1.8% in March compared with expectations of a 0.2% drop for the month, although the February increase was revised up 1.7% from 1.4%. Annual growth slowed to 1.7% from 3.7% previously and an expected gain of 3.4%.

On a 3-month basis, overall sales volumes declined 1.4% from the previous three-month period with weakness in three of the last four releases. This was the first quarterly decline since the fourth quarter of 2013.

Excluding fuel sales, there was a 1.5% decline on the month with the annual increase cut to 2.6% from 4.1%.

There were declines in sales both in the food and non-food sectors for the month with a sharp 2.4% decline in non-food sales.

Average store prices increased 3.3% in the year to March, the sharpest rate of increase since March 2012. On a monthly basis, overall prices increased 0.7% despite the decline in fuel prices which suggests underlying inflationary pressures have increased significantly.

The increase in prices will continue to have a negative impact on volumes growth in the short term.

The timing of Easter may, however, have had a significant impact on the March data with the potential for a rebound in April data.

The Bank of England is expecting retail sales growth to slow significantly this year, especially with downward pressure on real incomes as the rise in inflation takes effect and overall consumer spending growth will be weaker.

Sterling drifted slightly lower into the data which limited the immediate impact on release. GBP/USD extended losses to the 1.2785 area from 1.2800 with EUR/GBP trading just above 0.8380, although there was Sterling support on dips. Gilts held slight gains on the day with the FTSE index also slightly higher.

UK Retail Sales


Tim is a contributing author to He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.