UK retail boosted by Easter, but underlying spending weakens as fuel shock bites.
Summary:
- UK retail sales jump on Easter timing effect
- BRC like-for-like +3.1% y/y vs +0.7% prior
- Total sales +3.6% y/y vs +1.1% prior
- Barclays spending softer at +0.9% vs +1.0%
- Travel spending drops 3.3% y/y
- Consumers delaying purchases, building savings
UK consumer data for March painted a mixed picture, with retail sales boosted by seasonal factors while underlying spending remained subdued as higher fuel costs linked to the Middle East conflict weighed on households.
Figures from the British Retail Consortium (BRC) showed a notable pickup in retail activity. Like-for-like sales rose 3.1% year-on-year, accelerating sharply from 0.7% in February, while total sales increased 3.6% y/y compared with 1.1% previously. The strength was largely attributed to the earlier timing of Easter, which lifted food sales and supported discretionary categories such as toys, homeware, and electronics.
However, the improvement in retail turnover contrasts with softer signals from broader consumer spending data. Barclays reported overall consumer spending growth of just 0.9% y/y in March, slightly down from 1.0% in February, suggesting that momentum in household demand remains fragile.
The composition of spending highlights the pressure points. Travel-related expenditure fell 3.3% y/y, marking the first decline since March 2021 during the pandemic. Airlines and travel agents led the drop, reflecting the impact of higher fuel costs and disruption tied to the Iran conflict. Retail data echoed this trend, with travel-related goods also underperforming.
Consumer behaviour is shifting more defensively. Surveys show households are increasingly delaying major purchases and building savings buffers amid heightened geopolitical uncertainty and rising living costs. This suggests that while headline retail figures have been flattered by calendar effects, underlying demand is softening.
Looking ahead, the divergence between stronger retail sales and weaker overall spending points to a cautious consumer backdrop, with energy-driven cost pressures likely to keep activity muted in the coming months despite pockets of resilience.
