UK retail sales in record fall as inflation bites
BRITISH retail sales dropped by a record in March as accelerating inflation squeezed households' finances and concerns about job cuts prompted consumers to cut back, the British Retail Consortium (BRC) said.
Sales at stores measured by value fell 1.9pc from a year earlier, partly due to the timing of Easter in 2010, the London-based BRC said yesterday.
That's the biggest drop since the series began in 1995 and compares with a 1.1pc gain in February. On a like-for-like basis, which excludes new store openings, sales fell 3.5pc, the most since 2005.
UK households are seeing their spending power eroded at the fastest rate in 60 years as food and energy costs soar and the aftermath of the recession restrains wage increases.
Signs of a faltering economic recovery as well as the government's value-added tax increase and the deepest spending cuts since the Second World War are undermining consumer confidence.
"Uncomfortably high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for 30 years," BRC director general Stephen Robertson said in the report. The combination has "left people unwilling to spend unless they really had to".
The pound declined as much as 0.5pc against the dollar after the report and was trading down 0.3pc at $1.6299 in London. The yield on the 10-year UK government bond fell three basis points to 3.78pc.
Inflation probably held at 4.4pc in March, according to the median of 30 economists in a Bloomberg News survey, more than twice the Bank of England target. The Office for National Statistics will publish the data today.
The Bank of England left its key interest rate at a record low of 0.5pc last week as a faltering recovery takes priority over the threat from price growth.
Big-ticket home and furniture purchases "suffered most" in March and sales were often promotion-led, the BRC said.
HMV, the music retailer, and Carpetright, both issued profit warnings last week. Andy Bond, former chief executive officer of Wal-Mart's Asda chain, said the "retail recession" was still ahead and forecast an "extended period of constrained consumption". (Bloomberg)