Yahoo Finance UK retail sales slump in April as soaring prices dampen spending
Britain's retail sales declined in April as households tighten their purse strings amid the soaring cost of living, according to the Confederation of British Industry (CBI).
This was the first year-on-year slump in volumes in 13 months as higher prices impacted spending at time when the cost of the weekly shop is up, gas and electricity bills soar, and record fuel prices.
The CBI’s headline retail sales balance tumbled to -35 in April from 9 in March, well below analysts' expectations of a -5 fall. The balance deducts the number of retailers saying sales rose from those reporting a fall, with some 63% of retailers reporting a decline in volumes, compared with 28% who saw a rise.
Sales are expected to remain below seasonal norms next month, but to a lesser extent compared to April.
The figures compare sales with April 2021 when many non-essential shops saw an uptick after reopening as COVID restrictions eased, while other venues like pubs and restaurants remained shut.
However, retail demand was still weak this month even after adjusting for seasonal effects, with sales for the time of year declining to -24 from -23 in March.
Internet sales volumes continued to fall in the year to April for the third consecutive monthly drop, but at a slower pace than in March (-36% from -46%). They are forecast to decline at a modest pace in May (-6%).
The latest figures from the Office for National Statistics showed sales volumes fell 1.4% in March, faster than the 0.5% drop in February as consumers tightened their belts amid a cost of living crisis.
Read more: UK retailers to be hit by 'tsunami of costs', think tank warns
Economists have warned that "rapid inflation means that the cost-of-living crisis is going nowhere soon".
Martin Sartorius, principal economist at the CBI, said: "Retail sales were below seasonal norms in April as consumer spending continued to shift back towards services and rising prices impacted households’ spending power.
"To combat these challenges, the government will need to keep a close eye on support for vulnerable households and businesses struggling with higher energy prices.
"Meanwhile, going for growth must continue to be the government’s primary domestic focus, as increasing productivity growth is the only sustainable route to raise living standards."
It comes as consumer price inflation hit a 30-year high of 7% in March and is forecast to soar above 8% this month, as a 54% rise in regulated household energy tariffs kicks in.
The combination of soaring inflation and slowing demand puts more pressure on the Bank of England, which is expected to raise interest rates for a fourth month in a row on 5 May.
A separate analysis warned Britain's retail sector will be hit by a "tsunami of costs" in the coming months as households battle a cost of living squeeze, rising energy, food and fuel prices.
Watch: How does inflation affect interest rates?
