An early Easter boosted consumer spending in March and gave Britain’s retailers their best month in more than two years, according to a report.
Prompting hopes that the retail sector might be emerging from a protracted soft patch, the latest snapshot of spending in shops and online showed the value of sales above the current inflation rate for the first time since the early days of the cost of living crisis.
The monthly sales monitor from the British Retail Consortium and the accountancy firm KPMG said the value of sales was up by 3.5% in March on a year earlier. Inflation as measured by the consumer prices index stood at 3.4% in February and is expected to have fallen to about 3% in March.
Linda Ellett, the KPMG UK head of consumer markets, leisure and retail, said the Easter pickup in spending pointed to the possibility of “green shoots of recovery” for retailers.
“High street sales growth was driven by food and drink, health and beauty and keen gardeners who headed outside to enjoy the first days of spring. There were also some signs of improvement, with more categories starting to see positive sales growth in March for the first time in months.”
Ellett said the environment for retailers remained challenging and that consumer confidence was fragile despite the fall in inflation and the indication that interest rates had peaked at 5.25%.
“As April signals big increases in the sector’s cost base – through the rise in minimum wage rates and business rate hikes for the larger high street brands – retailers will be hoping that the bounceback of March sales is more than just an Easter blip,” she said.
A separate report from Barclays found card spending grew at an annual rate of 1.9% – below the inflation rate – as wet weather deterred consumers from visiting high street stores and restaurants.
Karen Johnson, the head of retail at Barclays, said: “Retailers were braced for a more subdued start to 2024, and recent figures are in line with expectations. The wet weather has been a key factor in the slowdown in discretionary spending, as it’s meant fewer visits to the high street and to hospitality venues.
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“However, in spite of this initial lull, many retailers are confident that spending will rebound in the coming months, particularly in anticipation of better weather, the energy price cap drop, an uplift in the national minimum wage, and the buzz around major events such as Taylor Swift’s Eras tour and the Paris 2024 Olympics.”
