Data released on Friday showed that Britons cut their purchases in February and consumer confidence levels fell this month as accelerating inflation cast a shadow over the world’s fifth-largest economy.
Retail sales volumes unexpectedly declined 0.3% in February compared to January. Economists polled by Reuters had expected, on average, a monthly increase of 0.6%.
Excluding auto fuel, whose price rose in February as tensions escalated between Russia and Ukraine, sales volumes fell by 0.7% more, Reuters reported.
The Office for National Statistics linked some fall to inclement weather that kept some shoppers indoors while the waning Omicron COVID-19 virus sent people back to bars and restaurants at the expense of grocery retailers.
But higher prices have increased the amount of money being spent on food purchases, even as quantities are reduced.
Analysts said the data – along with a GfK survey of consumer confidence dropping in March to levels last seen in November 2020 – served as a taste of things to come as inflation soared higher.
The GfK measure of personal finance for the next year has fallen to a combined record low, matched only by a reading in July 2008 when the global financial crisis was reaching its peak.
Inflation hit a 30-year high of 6.2% in February, and this week the government budget watchdog forecast it could approach 9% in late 2022, contributing to the biggest drop in living standards since at least the 1950s.
“Against this backdrop, it seems inevitable that households will continue to cut back on spending next month,” said Bethany Beckett, an economist at Capital Economics.
Finance Minister Rishi Sunak announced tax cuts this week that he said would help ease the pressure on families, but analysts said his plan did little to help low-income people.
There have been some bright spots for retailers.
The easing of the coronavirus crisis and the ensuing increase in social contact and return to the workplace led to a 13% jump in apparel sales in February compared to January.
The share of online sales by value was the lowest since March 2020 at 27.8% but overall sales were 3.7% higher than pre-coronavirus levels in February 2020.
Volumes of fuel purchased exceeded pre-pandemic levels for the first time, although the amount of money spent on fuel grew more quickly, reflecting higher prices.
Compared to the previous year, overall sales volumes rose 7.0%, less than the 7.8% forecast in a Reuters poll.
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