Did retail sales really fall in March because of the wet weather? This is the excuse being trotted out by the ONS and many others this morning. Or is it really more a case of February’s surprise rise in sales being too good to be true, and the economy not being as perky as we have fooled ourselves into believing?
Sales volumes have been recorded by the ONS as plunging 0.9 per cent in March, nearly cancelling out the rise of 1.1 per cent in February (which itself was revised down from 1.2 per cent). Sales volumes are still up a modest 0.6 per cent over the past three months, but in March they were 3.1 per cent lower than they were a month earlier.
It ought not to really be a surprise. Inflation is eating away at consumers’ buying power, and wages are not keeping pace. The Consumer Prices Index (CPI) is up 10.1 per cent over the past 12 months but regular wages only 5.9 per cent. Moreover, rising interest rates have imposed their own burden on consumer finances. Today’s retail sales figures show the same story across food and non-food sales: people are spending more but getting less. That is likely to remain the picture for as long as inflation eats into real incomes.
We may have escaped recession so far, but economic growth remains deep in the doldrums
But the weather? According to Darren Morgan, director of economic statistics at the ONS, ‘Department stores, clothing shops and garden centres experience heavy declines as significant rainfall dampened enthusiasm for shopping’. Blame the rain for declining high street sales if you want, but the figures show that non store retailing – i.e. over the internet – also fell in March, by 0.8 per cent. Apparently, it wasn’t just too wet to go off down the high street, it was too wet for us to get our laptops out and sit on the sofa buying stuff.
I don’t think we should be fooled. We may have escaped recession so far, but economic growth remains deep in the doldrums. We have flaccid productivity (down 7 per cent in the public sector since before the pandemic according to the ONS) and a large number of people seem to have gone missing from the workforce, either through early retirement of apparent sickness.
April has seen pretty lousy weather so far, too, but if the sun does come out in May, don’t expect too much of a rebound in sales. February’s unexpectedly strong rise in sales is looking a bit of a statistical blip. We are unlikely to see a genuine recovery in retail activity until inflation and interest rates embark on a lasting fall which restores real-terms buying power.
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