UK March retail sales rise 5.1%, but consumers feeling the squeeze - BRC

UK retail spending rose in March on an annual basis, boosted by spending for Mother's Day, although the cost-of-living crisis and wet weather kept consumers at home, according to the British Retail Consortium (BRC).

The lobby group reported a 5.1% year-on-year increase in retail spending in March, down from annual growth of 5.2% in February. Like-for-like sales rose by 4.9%, the same as in February.

"While the wettest March in over forty years dampened sales growth for fashion, gardening and DIY products, Mother's Day brightened up sales for the month," said BRC chief executive Helen Dickinson, adding that jewellery, flowers and fragrances were big-selling items.

However, the wettest March in more than 40 years held back demand for fashion items, as well as gardening and DIY products, normally popular items as the weather started to turn warmer.

Paul Martin, UK head of retail at KPMG, which also compiled the survey, said people were choosing to eat at home rather than go to restaurants to cut costs.

This trend was likely to continue in April as council tax, mobile and utility bills rose and personal tax allowances were frozen.

"We will see consumers having to further cut back on discretionary spending," he said. "Consumers will continue to take steps to reduce spend where they can - switching where they shop, what they buy, and spending on fewer items."

Consumers have been squeezed by inflation running at 10% and stagnant wages, meaning households are suffering the lowest level of living standards since records began in the 1950s.

"Rising prices are masking a slowdown in volumes of goods sold as individuals and households are forced to spend more pounds on fewer items, flattering the retail sales figures," said Victoria Scholar, head of investment at Interactive Investor.

"Inflation is stuck in double digits at 10.4% in the latest data for February. This is adding to cost-of-living pressures on consumers who are struggling with falling real wages, expensive bills for essential items, rising interest rates and a sluggish economic backdrop."

Reporting by Frank Prenesti for Sharecast.com