UK retail sales slump in April

British retail sales slumped in April with the first year-on-year fall in volumes in 13 months, reflecting a cost-of-living squeeze and changed spending patterns, figures from the Confederation of British Industry showed on Wednesday.

The CBI’s headline retail sales balance fell to -35 in April from +9 in March, well below the average -3 expected in a Reuters poll of economists. Some 63 per cent of stores reported that sales volumes fell, compared with 28 per cent who experienced a rise.

The data compares sales with April 2021 when many non-essential shops had a surge in sales as they reopened after COVID restrictions, while other venues such as pubs and restaurants remained closed.

However, even adjusting for seasonal effects, retail demand was weak this month as sales for the time of year fell to -24 from March’s -23.

“Rapid inflation means that the cost-of-living crisis is going nowhere soon,” CBI economist Martin Sartorius said.

“Retail sales were below seasonal norms in April as consumer spending continued to shift back towards services and rising prices impacted households’ spending power,” he added.

Consumer price inflation hit a 30-year high of 7.0 per cent in March and is forecast to be even higher this month, as a 50% rise in regulated household energy tariffs kicks in.

Pay is not keeping up. Employers offered an average 4 per cent annual pay rise this month, and consumer confidence is its lowest since the 2008 financial crisis.

Other data and surveys have suggested that richer households - many of whom built up savings during the pandemic - are spending more on services such as travel and eating out, and less on consumer goods, than they did last year.

However, forecasts that growth will only slow moderately hinge on households drawing down on savings much more than they have so far, Gabriella Dickens, an economist with consultancy Pantheon Economics, said.