Retail sales ground to a halt last month as shoppers turned their backs on department stores because of rising prices.
But the flat performance follows a more impressive start to the year which means the sector should still help pull the UK out of recession.
The Office for National Statistics (ONS) said retail sales volumes in March were unchanged on the month before.
High Street department stores such as John Lewis were the biggest losers with sales down 3.8 per cent.
The stores reported that ‘higher prices hit trading’ said ONS senior statistician Heather Bovill.
Hope: The flat performance follows a more impressive start to the year which means the sector should still help pull the UK out of recession
Food stores also saw sales decline though it was a better month for the High Street, where a rise in footfall helped clothing and furniture retailers post growth. The stagnant performance for retail sales fell short of the 0.3 per cent growth predicted by economists.
It follows growth of 3.7 per cent in January and 0.1 per cent in February.
Lisa Hooker, leader of industry for consumer markets at accountancy giant PwC, said: ‘What is clear is that the first quarter of the year has been disappointing for many retailers.
‘Lower inflation and the first 2 per cent cut to National Insurance which was felt in January’s pay packets has yet to translate into a sustained recovery in spending.’ However for the first three months of 2024, sales were still 1.9 per cent up on the previous quarter. That should help the wider economy emerge from the recession at the end of last year when GDP shrank for two quarters in a row.
It is only the second quarterly expansion in retail volume sales since the start of 2022, a period during which consumers have experienced a painful cost of living squeeze.
‘Green shoots for retailers have started to appear,’ said Ellie Henderson, economist at wealth manager Investec.
Alex Kerr of analysts Capital Economics, said: ‘Although retail sales volumes remaining unchanged in March was worse than expected, sales volumes in Q1 [first quarter] still rose as a whole, bringing the retail recession to an end. And as inflation falls, we still think rising real household incomes will support retail activity throughout 2024.’
Separate figures this week showed that inflation fell to 3.2 per cent in March, its lowest level in two and a half years, which Chancellor Jeremy Hunt said should see people ‘start to feel the difference’.
A survey by Deloitte yesterday showed consumer confidence at its highest level since the third quarter of 2021.
Falling inflation provides relief to millions of households after a painful period when it spiked to a four-decade high of 11.1 per cent amid soaring energy and food prices. It is expected to head back down to the Bank of England’s 2 per cent target this spring resulting in interest rate cuts.
