Retail sales plunge blamed on widespread price rises

A shopper reaches for a box of tea in a supermarket in London

A shopper reaches for a box of tea in a supermarket in London Britain

"Today's retail sales figures show a decline on the month and on the three months to March", senior ONS statistician Kate Davies said in the statement.

Retail sales volumes contracted 1.4 percent in the first quarter after rising 0.8 percent in the last three months of 2016, the Office for National Statistics said.

In March, inflation rose 2.3% year-on-year last month, up from the 1.8% reading recorded in January and higher than the 2.1% figure analysts forecast, meaning the increase was the fastest on record since September 2013.

K. retail sales fell steeply on the month in March, data showed Friday, as price increases fueled by the pound's sharp post-Brexit vote depreciation caused Britons to rein in spending.

The ONS said average store prices had their biggest growth since March 2012, jumping 3.3 per cent year-on-year, while petrol prices shot up by 16.4 per cent on average.

Kate Davies, ONS senior statistician said: "This is the first time we've seen a quarterly decline since 2013, and it seems to be a outcome of price increases across a whole range of sectors".

The ONS said retail sales were likely to shave around 0.1 percentage points off first quarter economic growth - the first negative contribution of the sector since the last quarter of 2010.

Even allowing for fact that a later Easter in 2017 pulled some sales back to April from March, the figures were "dire" said economist Howard Archer at IHS Markit and fuelled his belief that weakened consumer spending pulled United Kingdom gross domestic product growth down to 0.4% quarter-on-quarter in the first quarter of 2017 from 0.7% quarter-on-quarter in the fourth quarter.

"This is the clearest indication yet that the expected slowdown in the United Kingdom economy has begun, and we should expect to see this confirmed in other economic data over the next few months".

ING's senior United Kingdom economist James Knightley called the figures "dreadful".

"The story for the household sector isn't great right now". Inflation has caught up with pay growth, so real incomes of workers are no longer rising.

Consumers have been plundering their nest eggs, or spending more on credit, to maintain their standard of living in the face of rising inflation. Marks & Spencer also said it would close six stores.

That contraction seems to have been caused by the recent increase in inflation, with prices now increasing at nearly exactly the same rate as wage rises.

The squeeze on household spending power threatens to derail the strong consumer activity that has helped keep the economy on course since the referendum.

The three months to March 2017 saw the first quarterly decline in retail sales since 2013, said the ONS.

A dry spell for the housing market - which has had nearly a year of lacklustre sales, according to surveyors' body Rics - was blamed for a steep fall in sales of household goods and furniture. Clothing and footwear lost 0.9%, sales of household goods were flat and "others", embracing everything from carpets to jewellers and pharmacies, plunged 7.7%. It said the largest decreases were among stores selling household goods and fuel - at 3.3% and 3.1% respectively.

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