It will come as no surprise to shopkeepers that this is the worst period the industry has experienced since records began.
Challenges are coming from all anlgles - the recent VAT rise, commodity and energy prices soaring and consumer confidence falling in step with public sector cuts and threats of unemployment.
So the latest figures from the British Retail Consortium are not entirely surprising:
- UK retail sales values were down 1.9% on a total basis from March 2010, when sales had risen 6.6%, boosted by Good Friday and Easter Saturday falling in the March trading period. On a like-for-like basis, sales were 3.5% lower, against a 4.4% increase in March 2010.
- Like-for-like food sales fell well below their year-earlier level and non-food sales showed an even larger decline. Consumers’ underlying uncertainty about jobs and incomes, as well as the later Easter, hit both. Big-ticket home and furniture purchases suffered most and sales achieved were often promotion-led.
- Non-food non-store (internet, mail-order and phone) sales growth fell further in March. Sales were 7.5% higher than a year ago, the smallest increase since the series began in October 2008 and much weaker than the 10.4% in February.
Stephen Robertson, Director General, British Retail Consortium, said, “This is the worst drop in total sales since we first collected these figures in 1995. Non-food retailers were particularly hard-hit. This is strong evidence of the pressure customers and traders are under. This year's later Easter is a factor but this fall goes way beyond anything that can be explained by that alone.
"Uncomfortably high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for thirty years. Mounting fuel and utility costs, falling house prices, higher VAT and the prospect of more tax rises and job losses left people unwilling to spend unless they really had to. These pressures aren't going away and the arrival of higher National Insurance is likely to compound them in the immediate future.
"The next interest rate decision is a difficult balancing act for the Bank of England but, for now, supporting our weak economy must be the priority. Inflation is coming mainly from temporary and external price shocks - VAT, world commodity prices and the weak pound - not wage or consumer-driven increases. Increasing interest rates would do more harm than good."
News that inflation has fallen backs up the BRC claim that retailers are taking the hit on increasing commodity prices and VAT. By not passing these increases on to the consumer the overall Consumer Price Index is being kept in check.
Also the slight fall in unemployment figures could give people a little bit more confidence that the country could just manage to side step the double dip.
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British Retail Consortium