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Warning of tougher times for consumers after Easter sales boost

09 May 2017

According to official statistics, United Kingdom retail sales posted their biggest quarterly fall in seven years in March, as the prices of everyday goods continued to climb.

Helen Dickinson, Managing Director of the BRC, however, cautioned reading too much into the rise, saying nearly all the gains were due to Easter-effect.

Retail sales were 1.8% lower in March than in February, the Society of Motor Manufacturers and Traders said new auto sales were nearly 20% lower in April than a year earlier, while the Halifax said house prices in April - the start of the spring housebuying season - fell 0.1% and have now fallen £3,000 from the peak reached last December.

Total food and drink sales rose 3.6% in the three months to April, while non-food sales were up 0.7%. This is much faster than the 12-month Total average growth of 2.0%, the highest since February 2014.

Good news came from online sales of non-food items, which grew 8.2 per cent over the three months to April, though in-store sales dropped 1.3 per cent on a total basis and 1.8 per cent in like-for-like terms.

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The BRC observed that food continued to contribute most to year-on-year growth in the overall value of United Kingdom retail sales, with inflation playing a part in this.

Helen Dickinson, chief executive of the British Retail Consortium, said: "As expected, the Easter holidays provided the welcome boost to retail sales, which goes some way to making up for the disappointing start to the year".

Consumers were focusing increasingly on saving money by buying cheaper, own-label brands from supermarkets and were being more cautious about non-food spending, she said.

The two surveys found that rising inflation had resulted in consumers devoting an increasingly share of their pay packets on household essentials.

"The next government needs to deliver a plan that puts consumers first in its economic policies and the forthcoming Brexit negotiations". "That said, in the ultra-competitive grocery sector, these growth figures should be taken with a hefty pinch of salt, with margins under significant pressure and profitability remaining a concern", he added. Similarly, the additional free time seemingly prompted shoppers to roll up their sleeves and get stuck into home improvements, with furniture and homeware sales proving popular.

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"Looking ahead, retailers need to ensure that this month's boost doesn't lull them into a false sense of security".

"The retail landscape is changing fast and as such, agility and the ability to manage costs will remain critical". In total, sales jumped 6.3% from the same period past year.

The limp performance from non-food retail comes despite falling prices on many categories in the sector.

"The public remains in a state of uncertainty though and we can not be sure how long the good run will last". It is expected to rise further in the coming months.

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Warning of tougher times for consumers after Easter sales boost