LONDON (Reuters) - Britain’s consumer economy failed to rebound last month after snowy weather kept shoppers at home in March, according to surveys that add to downbeat data which make a Bank of England rate hike this week unlikely.
In a latest sign of slow growth in 2018, the British Retail Consortium (BRC) said on Wednesday that overall retail spending contracted by 3.1 percent year-on-year in April after a 2.3 percent rise in March.
That marked the sharpest drop since BRC records began in 1995.
The plunge largely reflects the timing of the sales-boosting Easter holidays — which started in March this year rather unlike last year when they were in April — but the BRC also warned of a weakening underlying trend.
“Even once we take account of these seasonal distortions, the underlying trend in sales growth is heading downwards,” BRC chief executive Helen Dickinson said.
A separate survey from payments company Barclaycard also pointed to lacklustre consumer spending in April.
Britain’s economy barely expanded in the first three months of 2018 and official statisticians said this was not solely down to heavy snow that fell in late February and early March.
Since then, business surveys have recovered less than expected and BoE Governor Mark Carney has suggested the central bank could wait before raising rates, causing a sharp shift in financial markets away from bets on a rate hike this Thursday.
Looking at retail sales over the three months to April, which smooths out March’s jump and last month’s plunge, the BRC said overall spending was up just 0.4 percent year-on-year — the weakest increase since the three months to March 2017.
The BRC said the market was likely to remain “extremely challenging” for most retailers.
Already this year Toys R Us UK, electricals group Maplin and drinks wholesaler Conviviality have filed for protection from creditors, while fashion retailer New Look is also closing stores.
“The retail industry is clearly in distress. The underlying environment proved painfully weak as non-food total sales plunged to a nine-year low (in the three months to April),” Richard Lim, chief executive of consultancy Retail Economics, said of the BRC data.
On a like-for-like basis favoured by retail analysts because it strips out changes in floorspace, retail sales fell 4.2 percent year-on-year in April after a 1.4 percent rise in March — the biggest drop in 13 years.
Separately, Barclaycard said consumer spending — which includes a broader range of purchases such as eating out — rose at an annual pace of 3.4 percent in April after increasing just 2.0 percent in the previous month, when heavy snow led to a sharp slowdown.
Excluding March, April marked the weakest increase in five months.
“The UK seems to be caught in a holding pattern, with people still budgeting carefully,” Barclaycard managing director Paul Lockstone said.
Reporting by Andy Bruce and Ana de Liz, editing by David Milliken