British household spending - the main driver of the UK's economy - is apparently slowing sharply.
London - Sales post biggest quarterly fall in seven years during Q1 2017
British retail sales posted their biggest quarterly fall in seven years during the first three months of 2017, as rising prices since last year's Brexit vote put more pressure on consumers, official data showed on Friday.
Sterling fell to a day's low after the weaker-than-expected figures, extending a decline that started after it reached its session peak around 0800GMT.
Retail sales volumes contracted 1.4 per cent in the first quarter after rising 0.8 per cent in the last three months of 2016, the Office for National Statistics said.
It was the biggest quarterly decline since the first quarter of 2010, and is likely to reinforce the view among many economists that household spending - the main driver of the economy - is now slowing sharply. That may prove a concern for Prime Minister Theresa May, who earlier this week unexpectedly called for an early national election.
"Families are facing the fastest rise in living costs for over three years and they are reining in their spending rapidly," Richard Lim, chief executive of the Retail Economics consultancy, said. "We're concerned for the outlook for the retail industry given the toxic mix of rising operating and sourcing costs against a backdrop of weaker consumer demand and heightened political and economic uncertainty."
Retail sales data are not a precise guide to household consumption, but analysts said Friday's figures were an unpromising signal for the economy, corroborating other surveys that show inflation taking a toll on household finances.
The ONS said falling retail sales were likely to shave around 0.1 percentage points off first quarter economic growth - the first negative contribution from the sector since the last quarter of 2010.
Retail sales volumes during March alone were worse than all forecasts in a Reuters poll of economists. They shrank by 1.8 per cent, after a 1.7 per cent increase in February. Year-on-year, retail sales growth slowed to 1.7 per cent in March from 3.7 per cent in February, compared with forecasts of 3.4 per cent growth.