What’s going on?
Data out on Friday showed that UK retail sales fell last month, even if the country’s shoppers have been swapping slippers for sneakers.
What does this mean?
Brits said farewell to the last of their Covid restrictions in February, and it looks like they couldn’t wait to get out and about: clothing and footwear sales were up 13% from the month before, and fuel sales were up 4%. Unfortunately, that’s where the spending stopped: sales at household goods stores fell by 3%, as home improvement habits ground to a halt. Online retail sales were down 5% too, which means they made up the smallest proportion of overall retail sales since the start of the pandemic in March 2020. All in all, that led overall retail sales to shrink 0.3% from January – a long way off the 0.7% growth economists were expecting.
Why should I care?
Zooming in: Vote of no confidence.
Shoppers might’ve been buying less, but they spent 0.7% more as inflation in the country continued to climb. No wonder they’re not feeling too hot: data out last week showed UK consumer confidence fell in March for the fourth month in a row, hitting its lowest since the depths of the pandemic in November 2020. And since prices are only set to climb, Brits might be forced to cut back even more in the next few months…
The bigger picture: Softly, softly.
This data suggests the Bank of England might’ve been right to change its tone earlier this month, when it suggested that it might need to go a little easier on interest rate hikes than it thought. Now, though, some economists are speculating that it might not raise rates at all in the second half of this year – especially as another spike in the UK’s Covid cases proves the country’s economy isn’t out of the woods yet.
Originally Posted March 25, 2022 – Dress Code
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