This morning’s retail sales update isn’t pretty. Sales volumes fell by 1.4 per cent last month, following a 0.5 per cent drop in February (revised, and worse, than the original estimate of 0.3 per cent). The biggest fall came in non-store retail shopping: almost an 8 per cent month-on-month fall. However, the Office for National Statistics points out that overall sales volumes are still roughly 20 per cent higher now than they were pre-pandemic.
But the recent drop indicates that the cost-of-living crisis is already worsening, as inflation – now at 7 per cent – is taking its toll on real incomes and is already prompting changes in consumer behaviour. As Capital Economics notes today, the 9.9 per cent month-on-month increase in fuel prices in March – ‘the biggest monthly rise on record’ – explains the 3.8 per cent month-on-month fall in fuel sales volumes.
But whatever energy crunch the UK is experiencing from Russia’s war against Ukraine, assume the economic pain is hitting harder and faster in countries more dependent on Russian gas.
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