Retail sales in the U.K. record the biggest drop in seven years
Vietnam Tribune - Friday 21st April, 2017
Office for National Statistics said sales fell by 1.4 percent over the three-month period
Retail sales also sunk below expectations, dropping by 1.8 percent on the month of March
Drop is expected to trim U.K. economic growth by 0.1 percentage points in Q1’2017
LONDON, U.K. - According to recent figures released by the Office for National Statistics (ONS), retail sales in the country recorded the biggest drop in seven years.
The drop is being largely attributed to the rising cost of living in the country.
According to the figures released, this was the biggest drop in retail sales for seven years in the three months to March.
ONS data said sales fell by 1.4 percent over the three-month period.
It also dropped by 1.8 percent on the month to March, well below expectations.
The statistics agency pointed out that the drop is expected to trim 0.1 percentage points off U.K. economic growth in the first quarter of this year.
Sales volumes are said to have fallen in all types of shops except those selling textiles, clothing and footwear. The total amount spent was, however, still higher than a year ago.
Sales of textiles, clothing and footwear increased by 6.5 percent year-on-year in the quarter.
Online sales meanwhile continued to rise, increasing 19.5 percent in the 12 months to March and up 0.5 percent compared with February 2017.
In a statement, ONS senior statistician Kate Davies said, "Today's retail sales figures show a decline on the month and on the three months to March, which coincides with quarter one in 2017. This is the first time we've seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors."
The ONS added that the average store prices recorded their biggest growth since March 2012, rising 3.3 percent on the year.
Meanwhile, average petrol prices rose by 16.4 percent over the period - recording the largest contribution.
Andrew Sentance, PwC's senior economic adviser, said the post-Brexit surge in consumer spending "has come to an abrupt end.”
Sentance added, “Inflation has caught up with pay growth, so real incomes of workers are no longer rising. Employment growth has also slowed sharply over the past six months, even though unemployment remains historically low. The recent period of strong consumer spending growth also relied on households running down their saving and increasing borrowing. This is the clearest indication yet that the expected slowdown in the U.K. economy has begun, and we should expect to see this confirmed in other economic data over the next few months."
According to Keith Richardson, managing director of retail at Lloyds Bank Commercial Banking, after record growth in 2016, the retail sector was slowing down.
Richardson said, “These figures suggest that the clouds are now gathering over British consumers. Rising food and petrol prices, together with slowing real wage rises, appear to be finally prompting shoppers to tighten their belts, while the value of the pound continues to put pressure on retailers' costs."
Further, Chris Williamson, chief business economist at IHS Markit noted that the trend appeared to have continued into the second quarter.
He added, “The latest IHS survey data showed the amount of cash that households had available to spend fell in April to the greatest extent for two and a half years. Spending was supported by households eating further into their savings and taking on more debt [which] is clearly unsustainable in the long run."
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