Wet weather delivered uninspiring month for retail sales

22 March 2024

The latest ONS figures show retail sales volumes were flat (0.0%) in February, with department stores and clothing seeing an uplift of 1.6% and 1.7% respectively, but household goods fell by 1.0%. 

Jacqui Baker, head of retail at RSM UK and chair of ICAEW’s Retail Group, comments:

'Extreme wet weather in February translated into weak consumer spending and an uninspiring month for retail sales. In light of ongoing economic uncertainty, consumer confidence remains fragile, and households continue to be selective with where they put their money.

'Many retailers are still feeling the strain and will feel the UK chancellor missed an opportunity to support the industry in the recent Spring Budget. The upcoming increase in national minimum wage and business rates will only add to the current burden.

'Despite headwinds there are reasons to feel optimistic. With the latest National Insurance cut, energy prices set to fall further in April and inflation getting back on track, the hope is that this will give consumers’ the confidence to go out and spend more. Plus, with new season stock continuing to land, retailers can hopefully put an end to the prolonged discounting and focus on making back some margin.'

Thomas Pugh, economist at RSM UK, added: 'Flat retail sales volumes may seem a bit disappointing, but digging below the headline, there are some reasons for encouragement. First, the extremely wet weather in February probably had a dampening effect on sales, but the underlying trend is probably still positive. 

'Second, flat retail sales in February will still help to pull the economy out of recession in Q1 given the large rise in January. If retail sales volumes were flat again in March, Q1 would still be 1.6% higher than in Q4. 

'Third, there was more encouraging news on the inflation front. Prices increased by just 2.5% annually in February the smallest increase since early 2021. Eventually, lower inflation will feed through into healthier increases in sales volumes. 

'Fourth, there are plenty of reasons to be more positive on the outlook for the rest of this year. Lower inflation, strong wage growth and falling interest rates will give households a boost to their disposable incomes in the summer. What’s more, we expect consumer confidence to continue to improve, meaning that rising incomes should result in more spending. As a result, retailers probably won’t have to wait much longer before a material upswing in their prospects.'