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UK Economy Slowing Down, Retail Sales Fall as Cost of Living Soars

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Britons are cutting down on spending after being hit hard with soaring inflation and a higher cost of living, according to data published by the Office for National Statistics (ONS) on Thursday.

ONS said retail sales volumes in the UK dropped by 1.4 percent in March, following a decline of 0.5 percent a month prior as shoppers were forced to tighten their belts as the cost of goods soared.

Economists polled by The Wall Street Journal had forecast retail sales would fall by 0.2 percent.

The ONS’ Opinion and Lifestyle Survey (OPN) which covers the period March 16–27 found that 54 percent of adults in Britain reported spending less on non-essentials amid increased concerns about the cost of living.

According to Thursday’s data, the largest contribution in the decline came from non-store retailing, which includes online retailers and mail orders, among others, which saw sales volumes fall by 7.9 percent over the month following a drop of 6.9 percent in February.

Meanwhile, compared with a year earlier, March retail sales were up 0.9 percent. Economists had expected a rise of 2.8 percent.

Despite March’s declines, sales volumes were 20.3 percent above their February 2020 pre-pandemic levels, ONS said.

Food store sales volumes also fell by 1.1 percent, continuing a downward trend that began in November 2021, which ONS credited to higher spending in pubs and restaurants as COVID-19 restrictions eased, along with the impact of rising food prices across supermarket stores.

Darren Morgan, a director of economic statistics at the ONS, said: “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.”

Separate figures from S&P Global and the Chartered Institute of Procurement and Supply (Cips), also published on Thursday, showed that growth in the UK private sector had reached the slowest rate for three months as high inflation and the ongoing conflict in Ukraine impacted demand.

“April data pointed to a much weaker speed of recovery across the UK economy, largely due to the slowest rise in new orders so far in 2022. Survey respondents mainly noted that the cost of living crisis and economic uncertainty arising from the war in Ukraine had impacted client demand,” economists wrote.

The latest data comes as inflation levels reached a 30-year high of 7 percent in the UK in March and are forecasted to rise further this month as gas and electricity prices across the nation soared.

Bank of England Governor Andrew Bailey said on Thursday the British central bank was walking a” tight line between tackling inflation and the output effects of the real income shock, and the risk that that could create a recession and pushes too far down in terms of inflation.”

Katabella Roberts

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Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.



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