UK retail sales unexpectedly fall in February

UK retail sales unexpectedly fell in February, with online shopping dropping back below pre-pandemic levels and storms keeping shoppers away, according to figures released on Friday by the Office for National Statistics.

Retail sales declined by 0.3% following a 1.9% jump in January, missing expectations for a 0.6% increase. This left sales 3.7% above pre-pandemic levels in February 2020.

Non-store sales volumes fell by 4.8% over the month following strong growth in December and January, while food store sales were 0.2% lower in February, with large falls in alcohol and tobacco stores. This was most likely due to people going out more following the removal of Covid restrictions.

Non-food stores sales volumes rose 0.6%, with growth in clothing and department stores. However, this was partly offset by falls in other non-food stores and household goods stores, with some retailers suggesting that stormy weather had dented footfall.

The data also showed that the proportion of retail sales online fell to 27.8% in February - the lowest since March 2020 - continuing a broad downward trend since the peak in February last year at 37.7%.

Heather Bovill, ONS deputy director for surveys and economic indicators, said: "After a buoyant January, retail sales fell back a little last month.

"There was a notable decline for companies that predominantly trade online, following a strong performance over the festive and new year period."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Admittedly, some retailers told the ONS that the trio of storms - Dudley, Eunice and Franklin - that battered most of the country in mid-February contributed to the weakness in sales. Timelier data suggest that retail sales probably have recovered a bit in March; Springboard reports that footfall at retail locations in the first three full weeks of March averaged 85% of the level in the same period of 2019, up from 82% in February.

"Nonetheless, retailers are in for a very tough spell. Real household disposable income now looks set to drop by about 2.5% this year- comfortably the largest annual drop since records begin in the late 1940s - due to both high inflation and government policies."

Earlier, a survey from GfK showed that UK consumer sentiment plunged again in March as fears about the soaring cost of living intensified.

The overall score in GfK's consumer confidence index dropped to -31 from -26 a month earlier as all five component measures fell. The overall figure was the lowest since November 2020 when Covid-19 levels were rising rapidly with no vaccine.