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Shock plunge in retail sales deals pre-election economic blow to Sunak

The UK is at risk of falling into a recession after revised official figures show the economy declined between July and September (Jonathan Brady/PA) (PA Archive)
The UK is at risk of falling into a recession after revised official figures show the economy declined between July and September (Jonathan Brady/PA) (PA Archive)

The UK’s economic recovery hit a major speedbump just two days after Rishi Sunak’s election announcement, as official figures today revealed retail sales fell by a shock 2.3% in April.

The figures confounded City economists, who had expected a much more modest 0.4% decline.

Bad weather and the timing of the Easter holiday both played a role in the decline. Clothing retailers, sports equipment, games and toys stores, and furniture stores in particular struggled.

Sales are now down 0.8% year-on-year.Sales at household goods stores were down by 5.4%.

The amount spent online, known as online spending values, fell by 1.2% during April 2024, and by 1.5% over the year.

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Revised figures also show retail sales fell in March as well.

Economists will hope the unusually large fall will be followed by an instant rebound in the statistics, as it was in December and January, when a massive fall followed by a significant recovery raised questions over whether the figures were mostly due to the way the figures had been seasonally adjusted.

If there is not a significant and immediate rebound, the figures will put Rishi Sunak and Jeremy Hunt’s claims that the economy is on the right track heading into the election in doubt. GDP had grown in the first quarter by a strong 0.6% after the end-of-2023 recession, offering hope that the sluggish economy was finally getting out of first gear. However, a sharp retail slowdown may put the economy back into stagnation or decline.

Phil Monkhouse, UK Country Manager at global financial services firm Ebury, said: “Retailers were caught in the rain in April as retail sales volumes unexpectedly dropped by 2.3%, marking the first significant month-on-month downturn since December’s 3.3% cliff face drop.

“Cooling inflation and a marked dip in energy prices in April didn’t translate to heightened footfall as sticky interest rates and the wetter weather held back consumers from splashing out.

“With the snap general election announcement injecting fresh uncertainty into the minds of consumers, retailers should not bet on the summer weather significantly lifting spending any time soon.”