Rajeev Shaunak, head of consumer at MHA, comments on today’s ONS retail sales data.
The ONS retail sales data from February which although not as bad as feared shows how vulnerable retail spending remains to external pressures. Wet weather and fragile consumer confidence weighed on non‑food sales, and despite pockets of resilience in seasonal and gifting categories, demand remains highly selective rather than broad‑based. There was no doubt that there was also a slump in February following the January rush of sales and discounts.
Looking ahead, the wider economic backdrop continues to present challenges for households. Ongoing conflict in the Middle East risks further undermining household sentiment by adding to volatility in energy markets, at a time when inflation remains elevated and expectations around interest rates remain finely balanced. Against this backdrop, households are likely to remain cautious, prioritising essential spending and limiting discretionary purchases.
"For retailers, the key question is whether the current collapse in consumer confidence will translate into more permanent reduced spending on the High Street and further challenges to an already troubled sector."
