Shops doing worse than expected

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A PICTURE of the retail sector which was gloomier than expected emerged yesterday, fuelling fears over the strength of the recovery in the first quarter of the year.

Retail sales volumes fell by a larger-than-expected 0.8 per cent last month, the Office for National Statistics (ONS) said, while January’s growth was downwardly revised to 0.3 per cent from an earlier estimate of 0.9 per cent. The City had been expecting a 0.4 per cent decline in February.

A fall in inflation from above five per cent has eased the squeeze on household finances but yesterday’s figures, which also revealed a 0.4 per cent drop in retail sales values in February, showed consumers are still reluctant to spend.

Nida Ali, economic adviser to the Ernst & Young ITEM Club, said: “Today’s retail figures don’t bode well for GDP growth in the first quarter. The fundamentals underpinning consumer spending are still weak. Wage growth is sluggish, unemployment is on the rise and households are heavily indebted.”.

The UK economy declined 0.2 per cent in the final quarter of last year.