Latest retail figures give distorted view, says BRC

The Office for National Statistics (ONS) said today that underlying growth in retail sales remained robust, driven by the food sector.

Its figures showed retail sales grew by 2.0% for the three months to March compared to the previous quarter

Sales in food stores were up by 1.7%, and non-food sales up by 1.8%.

But the BRC said the three-month growth figures disguised a fall last month and hide the fact that sales are being driven by deep and widespread discounting.

BRC director general Stephen Robertson said: “These figures paint an overly rosy picture. Sales growth is far from robust.

“ONS' own figures show non-food prices falling at the fastest rate for more than 20 years, showing it is taking deep and widespread price-cutting to tempt customers to buy anything other than non-essentials.”

“The BRC's March figures show total sales up only 1.1 per cent on a year ago, largely explained by rising food prices, while like-for-like sales are down on a year ago for the first time in two years.”

David Bush, Head of the Retail Services Team at accountants Grant Thornton, echoed Robertson's view.

He said: "These results are a surprise at first look and appear to contradict what the BRC and the CBI have reported in their most recent retail sales results. However we need to remember that Easter fell this year in March, which appears to have artificially boosted the sales increases quarter on quarter."

"A more realistic measure of the current state of consumer confidence is the overall 0.4% fall in the adjusted volume of retail sales between February and March, which was the biggest fall since January 2007.

“Additionally the equivalent month on month fall in sales volumes of non-food sales was 0.7% which was also the biggest drop since January 2007.

He continued: “Non food retailers (particularly those operating in the housing market and those that sell high ticket or discretionary products) are especially struggling."

"April's cut in interest rates will have come too late to have had an impact on today's figures. Additionally, it's doubtful whether this rate cut will be sufficient enough to offset the adverse factors such as rising food prices and domestic fuel bills, and the restriction by the banks of unsecured lending which are causing consumers to rein in their spending.”