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Retail sales slide as cold weather takes toll

(c) Sky News 2018: <a href="http://news.sky.com/story/retail-sales-slide-as-cold-weather-takes-toll-11337456">Retail sales slide as cold weather takes toll</a>
 

Retail sales fell by 1.2% in March as freezing weather kept shoppers at home, official figures show.

The decline was worse than expected because of a sharp 7.4% downturn in petrol sales as the cold snap deterred motorists from travelling.

But even stripping these out it was still a tough time for the high street with sales excluding petrol falling by 0.5%, according to the Office for National Statistics (ONS).

However the snow did provide a boost for internet spending, the ONS said.

Department stores enjoyed 0.8% growth as offers for Mother's Day and Easter gifts lifted online sales more than usual during the adverse weather.

The official data chimes with industry figures earlier this week showing that shopping visits declined at their sharpest rate since 2010 in March thanks to the icy conditions.

The latest figures rounded off a grim first quarter for retail sales, which were down by 0.5% compared to the final three months of 2017, the biggest quarterly fall for a year.

ONS senior statistician Rhian Murphy said: "Retail sales fell in the first quarter due to a large decline in March with petrol sales seeing a significant slump as a result of the poor weather keeping many shoppers indoors."

The figures came hours after department store chain Debenhams (Frankfurt: D2T.F - news) reported an 85% fall in half-year profits as sales were severely dented by the extreme conditions.

Howard Archer, chief economic adviser at the EY ITEM Club, said: "Retailers will be hoping that some of the sales that were lost in March to the bad weather will end up being largely delayed rather than lost."

The weather impact has added to the pressure on the high street caused by a year-long squeeze on household incomes that has only just ended, during which wage growth has been lagging behind inflation.

Mr Archer said the latest retail figures were unlikely to deter Bank of England policy makers from raising interest rates to 0.75% next month.

The Bank has already pencilled in a hit to first quarter growth from the cold weather, expecting GDP expansion to slow to 0.3%.

But Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said evidence of the weak trend in retail sales even before the cold weather struck, and growing caution among households, showed that consumers were "still not in a position to drive the economy strongly forwards".

He pencilled in a slowdown to 0.2% growth for the first quarter and said the weakness was "enough to give the MPC (Monetary Policy Committee) good reason to delay raising interest rates next month".