UK retail sales rose 0.7% in March, with rising fuel prices contributing to higher spending. But stripping out fuel leaves growth at a more modest 0.2%.
The headline figure actually masks a worrying period for consumers, who are being forced to spend more on fuel rather than elsewhere in the economy as the impact of the Middle East war takes hold.
Couple this with a revision lower for February’s figure to 0.6% from 0.4%, and there’s clear evidence of pressure on the retail sector. That said, the three months to March still paint a positive picture, with sales up 1.6% on the previous quarter.
Danni Hewson, AJ Bell head of financial analysis, said: “The jump in retail sales in March actually heralds bad news for the sector, as consumers rushed to fill up their vehicles amid rising petrol and diesel prices.”
“Not only was the increased price of a tank eating into household budgets, but some motorists were bringing forward this purchase. There have been concerns about rising prices and potential shortages as a result of the war in the Middle East which have so far not materialised.
“People can only spend a pound once and if they’re choosing to shell out more than normal on fuel, they’ll have less to spend on other purchases.”
This was being felt in London equity markets on Friday, with retailers such as JD Sports falling after the news was released.