Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Retail sales plunge as consumer confidence 'nears financial crisis all-time low'

Retail sales plunge as consumer confidence 'nears financial crisis all-time low'

The data, coupled with a closely-watched reading of consumer confidence, prompts a dive in the value of the pound and places the Bank of England in a tricky position as it decides whether to hike interest rates for a fourth consecutive time.

The pound has fallen sharply after several pieces of data raised fears of a slump ahead for UK economic growth, driven by surging inflation.

The market mood turned ugly when the Office for National Statistics (ONS) reported a 1.4% monthly decline in retail sales in March, led by a big drop in demand for online purchases.

There was little sign for optimism among retailers, except for the owners of garden centres and DIY shops, though the data did suggest that COVID-weary consumers shifted discretionary spending towards hospitality and attractions instead as the weather improved.

Economists had expected a 0.3% decline in sales month-on-month - and sterling dived by more than 1.5 cents against the dollar, to an 18-month low of $1.28, as investors fretted over the prospects for economic growth ahead.


The UK currency was also more than one cent off against the euro.

Adding to the gloom was data from a survey of purchasing managers showing the slowest rise in private sector output for three months in April - with record inflationary pressures and war in Ukraine hitting demand.

A closely-watched measure of consumer confidence, also covering April, delivered its second-lowest reading since records began nearly 50 years ago.

It suggests that consumer spending, the biggest contributor to the UK's GDP, is at risk of being choked off as families fret over rising bills for everyday goods and services.

ONS Director of Economic Statistics Darren Morgan said of the retails sales data: "Retail sales fell back notably in March with rises in the cost of living hitting consumers' spending.

"Online sales were hit particularly hard due to lower levels of discretionary spending.

"Fuel sales also fell substantially, with evidence suggesting some people reduced non-essential journeys, following record high petrol prices, while food sales continued to fall, dropping for the fifth consecutive month."

It all makes for worrying reading at the Bank of England.

The GfK consumer confidence index, derived from a survey, came in at -38 - worse than economists had expected and just shy of the all-time low seen in 2008 as the global financial crisis was gathering pace.

The responses were registered at a time when we learned that inflation had hit a 30-year high of 7%.

It is forecast by the Office for Budget Responsibility to climb above 9% after the unprecedented surge in the energy price cap in April - and rises in other household bills such as mobile, water and broadband are reflected in the calculations.

The price cap is currently expected to rise further - by up to £500 - in October when the additional effects of Russia's invasion of Ukraine are included, while the retail sector expects price rises to intensify throughout 2022.

GfK reported a sharp decrease in consumers' intentions to make major purchases.

All the data will be taken into account by rate-setters at the Bank, who have signalled more caution on rising rates ahead after lifting Bank rate to 0.75% at their last meeting.

They will be anxious not to choke off economic growth through rising interest rates, which are intended to stop rising inflation expectations, such as wage hikes, rather than rising prices as the inflation has been caused by factors outside their control including energy and food costs.

Inflation, while not demand-led, is nevertheless proving more sticky and persistent than policymakers had expected and financial markets still forecast a 0.25% rate hike at the next meeting of the monetary policy committee in two weeks' time.

That is because the inflationary fires have been stoked by Russia's war against Ukraine.

However, Bank governor Andrew Bailey admitted on Thursday that policymakers were walking a tight line between tackling inflation and avoiding recession.

That is because raising borrowing costs to help ease inflationary pressures could prove counterproductive with millions of mortgage holders - those on tracker or standard variable deals - already paying more.

Russ Mould, investment director at AJ Bell, said of the situation: "The ONS' retail sales data is a wake-up call that life is going to be tough for shops - virtual or physical - in the coming months.

"Once those vastly increased energy bills hit the doormat and households take time to reassess their financial situation, there is every chance that retail sales could get even worse," he wrote.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Hungary Ranked Among the World’s Safest Travel Destinations for 2025
G7 Leaders Fail to Reach Consensus on Key Global Issues
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
Wreck of $17 Billion San José Galleon Identified Off Colombia After 300 Years
×