UK retail sales growth hits eight-month high in March

The unusually early Easter holidays gave the UK retail sector a big boost in March, according to the British Retail Consortium-KPMG Retail Sales Monitor released on Tuesday

Total retail sales rose by 3.5% year-on-year last month, accelerating from the 1.1% annual rise registered in February, above the three-month average growth rate of 2.1% and the 12-month average growth of 2.9%.

March also saw the strongest growth rate since August 2023, with sales rising at a faster rate than inflation for the first time in more than two years, according to Linda Ellett, UK head of consumer markets at KPMG's Leisure & Retail division.

Over the three months to March, food sales were 6.8% higher than a year before, while non-food sales were down 1.9% - both in-store and online non-food sales registered a decline.

"High street sales growth was driven by food and drink, health and beauty and keen gardeners who headed outside to enjoy the first days of spring. There were also some signs of improvement with more categories starting to see positive sales growth in March for the first time in months," Ellett said.

However, Ellett said the UK retail remains a challenging environment, despite a recent improvement in macro conditions. "As April signals big increases in the sector’s cost base - through the rise in minimum wage rates and business rate hikes for the larger high street brands - retailers will be hoping that the bounce back of March sales is more than just an Easter blip," she said.

"Economic indicators are heading in the right direction with inflationary pressures easing and interest rates having potentially peaked, however consumer confidence remains fragile, and households continue to keep a close eye on where their tight budgets are being spent."