UK retail sales slipped in April as shoppers cut back on discretionary spending amid mounting economic uncertainty and higher fuel costs, according to the latest figures from the Office for National Statistics (ONS).
Retail sales volumes fell by 0.4 per cent excluding fuel during the month, with clothing and footwear sales down 2.4 per cent and non-store retailing declining by 2 per cent. Including fuel, sales volumes dropped by 1.3 per cent, reflecting a sharp 10.2 per cent fall in fuel sales.
Industry analysts said the figures highlighted increasingly cautious consumer behaviour, although convenience retailers and food-to-go operators could benefit from upcoming summer events and the men’s World Cup.
Jacqui Baker, head of retail at RSM UK, said shoppers were “pulling back on spending” as the ongoing Middle East conflict continued to weigh on consumer sentiment.
“The main glimmer of hope was health and beauty, with shoppers indulging in small, feel-good luxuries to get them through current uncertainty and the tough economic outlook,” she noted.
Baker warned that a weakening labour market, slowing pay growth and higher household bills could drive further trading down, with consumers increasingly focusing on value and own-label products.
“The decline in summer holiday demand due to the ongoing Middle East conflict will also have a knock-on effect on the retail industry. Not only will fewer people going away result in less retail spend, but so will a reduction in inbound tourism, hitting the leisure industry too,” she added.
Thomas Pugh, chief economist at RSM UK, said the decline in sales had been exacerbated by lower fuel purchases after motorists brought forward spending in March following price rises linked to the Iran conflict.
Looking ahead, he cautioned that rising utility bills, higher mortgage costs and persistent uncertainty could further squeeze household budgets during the summer months.
“Admittedly, the household saving rate is elevated going into the crisis meaning that consumers can save a bit less to cushion the blow to their lifestyles, so the full impact on income is unlikely to flow through into spending. Indeed, this is what happened in 2022 when the saving rate dropped sharply. But the longer the crisis goes on for, the more likely consumers are to adjust spending habits in response as consumer confidence wanes. That sets a much tougher outlook for retailers than we were considering before the war,” Pugh said.
Commenting on the figures, Nicholas Found, head of commercial content at Retail Economics, said April reflected a market “running on selective demand”.
“Weak sales levels were hardly surprising. Households have become more defensive as petrol prices rose, prompting many to limit journeys, while fears intensified over the wider economic fallout from the Middle East conflict,” he said.
He said consumers were prioritising essential and purposeful purchases such as health, beauty and technology, while food shoppers were increasingly relying on promotions and value-led offers.
Found added that retailers were facing growing pressure from both consumers and policymakers to keep prices affordable, while also battling rising wage costs and margin pressures.
“It’s a year of market-share battles, not market expansion,” he said.
Meanwhile, Justin Parr, chief credit officer at trade finance provider Treyd, said the upcoming men’s World Cup could provide a welcome boost for food and drink retailers.
“Even if consumers hold back on big-ticket purchases, like new TVs, many food and drink businesses should get a boost. Recent tournaments have provided a significant shot in the arm for retail sales when the home nations perform strongly,” he said.
Parr added that many retailers were likely to increase discounting activity to drive cashflow and clear stock, while supply chain partners would need to work more flexibly to manage ongoing cost pressures.