UK retail sales rose at slowest pace since 2022 in February

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UK retail sales and consumer spending rose at the slowest pace since 2022 in February, according to industry data published on Tuesday, spurred by bad weather and falling inflation.

Total retail sales increased at an annual rate of 1.1 per cent last month, down from 1.2 per cent in January, said trade body the British Retail Consortium. This was below the three-month average of 1.4 per cent and the 12-month average of 3.1 per cent.

The rate of growth was the lowest since August 2022 and was also below the 4 per cent rate of consumer price inflation in January, indicating that the three-year run of falling sales volumes, especially for non-food items, continued last month.

“Consumer demand was dampened by the wettest February on record, translating into a poor month of retail sales growth,” said BRC chief executive Helen Dickinson. “Not even Valentine’s Day lifted customers out of the gloom.”

Non-food sales fell at an average annual pace of 2.5 per cent between December and February, the largest three-month decline since 2022. Average food sales over the past three months rose by 6 per cent year on year, down from 6.3 per cent between November and January.

The data — released by advisory firm KPMG and the BRC ahead of official figures next week — suggests that even as sales volumes in food rise, profits at grocery stores and supermarkets may be declining as consumer prices decrease.

“The UK grocery market saw sales and volumes both increasing from last year, with February the third month in a row where volumes were in year-on-year growth” said Sarah Bradbury, chief executive of the Institute for Grocery Distribution, an industry group.

The BRC data echoed separate figures from Barclays, which showed consumer card spending rose 1.9 per cent year on year in February, the lowest rate of growth since September 2022. 

Spending on non-essential items increased just 1.7 per cent year on year last month, the slowest rate of increase since September 2022, according to the payments company.

Meanwhile spending on “in-speriences”, such as takeaways or film rentals, rose at an annual rate of 6.5 per cent, suggesting households stayed indoors to avoid record rainfall. The Barclays report also attributed the slowdown in sales, especially for foodstuffs, to falling inflation.

Jack Meaning, chief UK economist at Barclays, said less steep prices would “be a welcome reprieve for consumers, and a probable explanation of this month’s subdued card spending growth”.

Last week, separate figures showed UK business activity expanded more than expected in February, fuelling hopes the recession Britain entered at the end of 2023 could be over and of better months ahead for the retail sector.

“As inflationary pressures begin to ease, retailers will be hopeful that the onset of warmer weather lifts spending,” said Karen Johnson, head of retail at Barclays.