LONDON — UK retail sales fell in the month of February, sending a further troubling signal about the state of the British consumer in the aftermath of the vote for Brexit.
According to new figures from the British Consortium of Retailers (BRC), non-food retail sales fell for the first time since 2011 in the quarter to February, dropping by 0.4%.
The last time sales in this sector of retail dropped was in November 2011, when UK unemployment ran higher than 8% as the country adapted to the post-financial crisis world.
“Evidently February was yet another challenging month for the majority of retailers,” Paul Martin, UK head of retail at KPMG, which co-compiles the survey with the BRC, said.
The main driver for slumping retail sales is the inflation that has started to creep into the British economy as a result of the falling pound since last June’s referendum. Inflation is currently running at 1.8%, just below the Bank of England’s official target of 2%, and its highest since mid-2014.
Samuel Tombs of research house Pantheon Macroeconomics argues in an emailed reaction to the data that the BRC’s numbers suggest people are now suspending purchases as the economic uncertainty related to Brexit begins to take hold.
Here is Tombs:
“The BRC’s survey provides more evidence that the surge in retail sales in the second half of last year reflected consumers bringing forward purchases from 2017, because they anticipated price rises. The weakness was concentrated again in non-food sales, which fell by 0.2% on a total basis in the three months to February, the lowest growth since November 2011.”
The economic story that has played out since the referendum so far is a well-trodden path. I
nitial predictions of economic doom after the Brexit vote have so far failed to materialise — with the exception of the crashing pound — and economic data has broadly held up well.
However, if consumer spending continues to tail off, that’s a big problem.
The logic is simple — when people are worried about the state of their finances, they stop spending, and when people stop spending, that can signal serious problems on a macroeconomic scale.
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