The British Retail Consortium recorded the worst UK retail sales fall since it started collecting figures in 1995.
March’s UK retail sales values were down 1.9 per cent from March 2010, though Easter fell in the March trading period last year. On a like-for-like basis sales were 3.5 per cent lower, against a 4.4 per cent increase in March last year.
Bloomberg said that household spending power is being eroded at the quickest rate in over six decades with increasing food and energy costs and wage increases cut by the recession aftermath. Fears over job cuts and further tough times ahead are also believed to cautious consumer spending.
Disposable incomes have fallen year-on-year for the first time in 30 years.
Andy Bond, Wiggle board member (non-executive director) and former Asda chief exec said that a ‘retail recession’ is still to come for the UK, with an ‘extended period of constrained consumption’.
Stephen Robertson, director general of the BRC said: "This is the worst drop in total sales since we first collected these figures in 1995. Non-food retailers were particularly hard-hit. This is strong evidence of the pressure customers and traders are under. This year’s later Easter is a factor but this fall goes way beyond anything that can be explained by that alone.
"Uncomfortably high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for thirty years. Mounting fuel and utility costs, falling house prices, higher VAT and the prospect of more tax rises and job losses left people unwilling to spend unless they really had to. These pressures aren’t going away and the arrival of higher National Insurance is likely to compound them in the immediate future.
"The next interest rate decision is a difficult balancing act for the Bank of England but, for now, supporting our weak economy must be the priority. Inflation is coming mainly from temporary and external price shocks – VAT, world commodity prices and the weak pound – not wage or consumer-driven increases. Increasing interest rates would do more harm than good."
There’s more from the BRC here.