UK retail sales soften in February, BRC says

UK retail sales softened in February as consumers adopted a more cautious approach, with non-food sales bearing the brunt of the reduction in spending, according to the results of a widely-followed survey.

Total retail sales rose by 0.4% year-on-year in February, down from a 1.1% rise in the same month one year ago and below the three-month average of 0.8% and the 12-month average increase of 0.9%, according to the British Retail Consortium.

On a like-for-like basis, retail sales slipped 0.4% during the same month, down from a 0.1% rise in the preceeding year.

In terms of quarterly rates of change, LFL food sales advanced 0.6% and 2.0% on a total basis, taking the annualised rate for total average spend to 1.2% - the highest since May 2014.

Nonetheless, LFL non-food spend decreased 0.4% on a quarterly basis and by 0.2% in total terms - the first three-month fall since November 2011.

BRC chief Helen Dickinson said the later timing of Mother's Day this year had negatively distorted Febuary's data for some categories, such as women’s accessories and health and beauty.

Yet Dickinson conceded that "looking beyond this distortion, the persistent weak sales performance of several non-food categories points to an undeniable trend of cautious spending on non- essential items.

"Tougher times are expected ahead. The impact of inflation on consumer spending will add further intensity to an already fiercely competitive environment in which the ability to adapt and innovate will be key to survival. Looking to the Budget this week, we hope to see a commitment from Government to lay a path to a truly sustainable business rates system that will give retailers the flexibility needed to invest and support their local communities."

"Looking ahead, falling real wages, slow employment growth and further fiscal tightening all look set to ensure that consumer spending grows at an average quarter-on-quarter rate of just 0.2% this year, well below the 0.6% average of the last three years," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.