2022.03.2513:19:00UTC+00UK Retail Sales Log Unexpected Fall In February

UK retail sales dropped unexpectedly in February as people returned to work with the easing of restrictions and the online shopping declined, data from the Office for National Statistics revealed on Friday.

The retail sales volume dropped 0.3 percent month-on-month, in contrast to the 1.9 percent increase in January. Sales were forecast to climb 0.6 percent. Likewise, excluding auto fuel, retail sales volume decreased 0.7 percent, reversing the 1.7 percent increase a month ago. Economists had forecast a 0.5 percent increase.

Food store sales fell 0.2 percent on month with large falls in alcohol and tobacco stores, which may be linked to higher spending in pubs and restaurants.

Meanwhile, non-food store sales advanced 0.6 percent, underpinned by the 13.2 percent rise in clothing and 1.3 percent increase in department store sales, with wider socializing and the return to the office following the lifting of Plan B restrictions at the end of January.

Automotive fuel sales volumes rose 3.6 percent in February as the lifting of restrictions increased travel, data showed.

On a yearly basis, retail sales grew 7.0 percent but slower than the revised 9.4 percent increase logged in January and the expected 7.8 percent rise.

Similarly, annual growth in retail sales, excluding auto fuel, slowed to 4.6 percent from 7.5 percent in January. Sales were forecast to climb 5.6 percent.

With the easing of restrictions related to the coronavirus pandemic, the proportion of retail sales online fell to 27.8 percent in February, its lowest proportion since March 2020.

The small fall in retail sales in February probably had more to do with the shift back towards non-retail spending and the impact of Storm Eunice than it did the cost of living crisis, Bethany Beckett, an economist at Capital Economics, said.

But, with further rises in inflation and interest rates looking likely, the economist is downbeat on the outlook for overall spending this year.

The Distributive Trades Survey published by the Confederation of British Industry on Thursday showed that high street sales grew at a slower pace in March.

The retail sales balance fell to 9 percent in March from 14 percent in February. However, a net 39 percent expects sales to rise in the year to April.

Earlier in the day, survey results from GfK showed that British consumer confidence weakened for the fourth straight month in March as the cost of living crisis deepened. The corresponding indicator fell to -31 from -26 in February.