Retail sales FALL for first time in 13 months with 35% PLUNGE from last month: Britons spend less on luxuries to pay food, fuel and energy bills as cost-of-living crisis grips UK
- Confederation of British Industry headline retail sales balance falls to -35% in April from a +9% in March
- Soaring cost of essentials such as food and fuel is leaving households with less to spend on other items
- Firms who responded to CBI survey says they expect sales volumes to continue to fall but at -8% in May
- Inflation hit 30-year high of 7% in March and could be even higher this month amid 54% energy bills rise
Retail sales in Britain sank this month for the first time in more than a year – with companies expecting the decline to continue, a report revealed today as the increased cost of living continues to weigh on shoppers.
The closely-watched Confederation of British Industry (CBI) headline retail sales balance plummeted to -35 per cent in April from a +9 per cent reading in March, in what was the first fall in the difference in 13 months.
The figure was also well below the average of -3 per cent expected in a poll of economists carried out by Reuters.
Some 63 per cent of stores saw sales volumes fall in April while 28 per cent reported a rise, in figures that fuelled fears that the soaring cost of essentials such as food and fuel left households with less to spend on other items.
Firms across the country who responded to the CBI’s monthly distributive trades survey said they expect sales volumes to continue to fall, although at a more modest pace, as they predicted a -8 per cent reading for May.
Inflation hit a 30-year high of 7 per cent in March and is forecast to be even higher this month, as a 54 per cent rise in household energy bills kicks in for those on the Ofgem cap which is taking the annual average to £1,971.
Retail sales in Britain sank this month for the first time in more than a year. File picture: Shoppers on Oxford Street in London
The Confederation of British Industry (CBI) headline retail sales balance fell to -35 per cent in April from +9 per cent in March
Pay is not keeping up with rising inflation, with employers having offered an average 4 per cent annual pay rise this month, and consumer confidence is now at its lowest since the 2008 financial crisis.
Other data and surveys have suggested that richer households – many of whom built up savings in the pandemic – are spending more on services such as travel and eating out, and less on goods, than they did last year.
Grant Shapps refuses to rule out relaxing MOT rule
Transport Secretary Grant Shapps has refused to rule out relaxing MOT rules for motorists to ease the UK’s cost of living crisis.
Mr Shapps is reportedly considering allowing vehicles to only need an MOT every two years, rather than annually. The tests cost up to £54.85, with repair bills on top.
Asked about the issue by the Commons’ Transport Select Committee, Mr Shapps said any changes would need to meet a ‘very rigorous safety standard’.
He went on: ‘I don’t rule anything out. If you look at things like MOTs – cars have clearly become a lot more reliable than when the MOT, named after the Ministry of Transport, was put in place. I think it’s always right to keep these things under review, but there’s a lot of road to cover before we get to that point.’
Mr Shapps added: ‘I’m always looking at things that can assist but I’m certainly not in a position to make specific announcements about those things.’
Transport Select Committee member, Karl McCartney, told Mr Shapps it was ‘an absolutely crass idea’. Motoring groups including the RAC have warned that relaxing MOT rules ‘could make our roads far less safe’.
The survey question from the CBI deducts the number of firms saying they reported a decline in sales from the number reporting growth for the period.
The data also showed the first fall in the number of orders made to suppliers in 13 months amid the dampening in consumer sentiment.
Internet sales volumes also continued their decline against last year, although this slowed down slightly against the level reported in March.
CBI principal 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.
‘Rapid inflation means that the cost-of-living crisis is going nowhere soon. To combat these challenges, the Government will need to keep a close eye on support for vulnerable households and businesses struggling with higher energy prices.
‘Meanwhile, going for growth must continue to be the government’s primary domestic focus, as increasing productivity growth is the only sustainable route to raise living standards.’
The data compares sales with April 2021 when many non-essential shops had a surge in sales as they reopened after Covid-19 rules were eased, while venues such as pubs and restaurants remained closed for indoor dining.
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.
The CBI carried out its survey between March 25 and April 13, and had responses from 51 retail chains.
Gabriella Dickens, an economist with consultancy Pantheon Economics, said previous forecasts that growth will only slow moderately hinge on households drawing down on savings much more than they have so far.
She added: ‘Looking ahead, we expect retail sales to edge down over the remainder of the year.’
Internet sales volumes also continued their fall against last year, although this slowed down slightly against the level in March
The data released by the CBI today also showed the first fall in the number of orders made to suppliers in 13 months
Previously published official data for March showed retail sales volumes excluding fuel were 0.9 per cent lower than a year earlier.
The combination of surging inflation and slowing demand is adding to the challenge facing the Bank of England which is expected to raise interest rates for a fourth straight meeting on May 5.
Meanwhile high street bank Lloyds warned today that the outlook for the UK’s economy remains ‘uncertain’ due to soaring inflation, as it revealed that customers were cutting back.
The bank’s comprehensive spending data showed 1.2 million subscriptions had been cancelled over the past six months and it said inflation was driving customers to spend more on energy and food.
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