Economy

Retail sales tumble amid cost of living crisis

According to the Office for National Statistics (ONS), the biggest contribution to this fall came from online shopping, where sales plummeted 7.9% over the month

Retail sales fell by 1.4% last month as consumers reduced their spending amid the cost of living crisis. 

This marked a much steeper decline than the fall of 0.5% reported in February 2022, revised from a previous fall of 0.3%. 

According to the Office for National Statistics (ONS), the biggest contribution to this fall came from online shopping, where sales plummeted 7.9% over the month. While this followed another significant fall of 6.9% in February, online sales volumes were still 20.3% above pre-pandemic levels in February 2020.

Overall, the proportion of online retail sales fell to 26.0% in March however, its lowest proportion since February 2020 where it was 22.7%. This continues what has been a “broad downward trend” since its peak in February 2021 at 37.1%.

Elsewhere, food store sales fell by 1.1% last month, having fallen each month since November 2021. The ONS attributed this fall to higher spending in pubs and restaurants after restrictions were lifted, as well as the impact of rising food prices on the cost of living.

Non-food store sales rose by 1.3% however, largely due to growth in other non-food stores (2.9%), and household goods stores (2.6%) such as DIY stores.

Jacqui Baker, partner and head of retail at RSM UK, said: “Fear around the cost of living crisis has seen consumer confidence plummet to peak pandemic levels as uncertainty grips consumers spend, so it’s no surprise to see retail sales fall by 1.4% in March.

“The cost of living crisis and rebalancing of consumer spending habits is now starting to bite for online sales as we’ve seen two months of sharp decreases at 6.9% and 7.9% for February and March. The one positive was household goods which were up by 2.6%, driven by a strong housing market.”

She added: “Double digit price inflation on certain categories including clothing and footwear and furniture at 10% is squeezing the consumer pound making it harder to justify spend. Add in soaring energy prices, increased interest rates and higher NIC tax contributions and consumers are having to re-evaluate and prioritise spending.

“However, some people are taking the opportunity to dine out, or head abroad for a well-earned break, now that restrictions have eased, but this only compounds the competition for disposable income. Unfortunately, this headwind will persist with the energy price cap increasing in April and pressure on retail spending looks set to continue throughout 2022.”

Back to top button