Shoppers walk past Debenhams store in Oxford Street, London on October 25, 2018.
Subdued retail sales figures stand in contrast with a generally healthy labour market © Tolga Akmen/FT

Growth in UK retail sales slowed markedly in the first three months of this year as Brexit uncertainty made shoppers more cautious, an industry body said.

Retail sales rose 0.6 per cent in the first quarter of 2019 compared with a year earlier, far below the 1.8 per cent growth rate recorded for the start of 2018, according to data from the British Retail Consortium and KPMG representing three-fifths of the sector. In monthly terms, sales in March were down 0.5 per cent on the same month last year.

The comparisons are complicated by the fact Easter was in March last year but April this year. But the figures also show that, for two months in a row, sales growth has been slower than it was a year earlier.

“Retail sales slowed in March, even when the Easter distortions were accounted for, as greater uncertainty caused people to hold off from splashing out,” said Helen Dickinson, chief executive of the British Retail Consortium. 

The subdued retail sales figures stand in contrast with a generally healthy labour market. In January, real regular earnings rose at the fastest pace since 2015 while the proportion of people in employment was at a record high.

Despite this, shoppers are increasingly pessimistic. In March, consumer confidence dropped to -12 in the UK, according to a survey by the European Commission, the lowest reading in eight years and below that of most peers, including -2 for Germany.

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In March, during the countdown to the original date of departure from the EU, Brexit became Britons’ main personal concern, according to a survey by GFK, ahead of worries about money and the NHS.

In the BRC data, consumers’ concerns were particularly reflected in sales of items other than food. In the first quarter, food sales grew at an annual rate of 1.3 per cent, but non-food sales were largely flat.

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“For the great majority, it has been food shopping as usual,” said Susan Barratt, chief executive of IGD, a grocery research company. But “other categories, mainly big-ticket items including furniture, remained overlooked”, said Sue Richardson, UK retail director at KPMG.

Separate data from Barclaycard, which tracks nearly half of the nation’s credit and debit card transactions, showed that in March clothing sales contracted for the sixth consecutive month, and spending in department stores was down 4.7 per cent. 

Barclays overall spending data for March painted a more upbeat picture as it included spending at pubs and restaurants, which was stronger this year amid milder weather. 

“Brexit continues to feed the uncertainty among consumers. For the sake of everyone, MPs must rally behind a plan of action that avoids no deal — and quickly — or it will be ordinary families who suffer as a result of higher prices and less choice on the shelves” said Mrs Dickinson.

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