Retail sales fall at fastest rate for two years as fuel purchases dry up after the petrol panic
09:31 GMT, 23 May 2012
Retail sales fell at their fastest pace for two years in April after the petrol panic in March resulted in a record drop in fuel sales in the weeks that followed.
The Office for National Statistics reported today that retail sales values fell by 2.8 per cent in April, with sales volumes falling 2.3 per cent.
Sales in April were 1.1 per cent lower than the same month a year ago. Economists had been expecting a 1 per cent annual rise.
Running out of fuel: A rush on petrol in March meant that sales in April fell sharply.
Most of the fall between March and April was down to plummeting fuel sales following panic-buying at the petrol pumps in March.
Drivers responded to warnings from ministers that a fuel tanker driver strike could lead to shortages by queuing at forecourts to stock up on petrol and diesel. The effect was to bring petrol sales forward and the rush meant petrol stations ran dry.
The rush has led to a 2 per cent jump in retail sales during March, but today's figures confirm that all of that increase and more was lost in April.
Even stripping out fuel sales, retailers had a bad month. Sales values outside of fuel fell 1.3 per cent on the month, while volumes fell 1 per cent.
Record rainfall in April led to a reduction in sales of clothing and footwear, which fell at its sharpest monthly pace since June 2008. Clothing sales volumes plunged 5.2 per cent in April as retailers failed to shift summer clothing stocked up in unseasonably warm March.
The inclement weather triggered a 1.7 per cent drop at non-food stores, the ONS said, while food stores saw a 0.6 per cent decline. The bad weather also hit so-called other stores, a broad category including toy shops, garden centres and jewellers.
Philip Shaw, chief economist at Investec, said: 'The headline number is very very weak indeed, but that's mainly due to the effect of lower fuel sales over the threatened strike period.
'Nonetheless, stripping that out, there is still a big drop in sales, which is probably weather related. So it's very difficult to get a gauge of underlying strength of high street activity from these numbers given so very big distorting factors.'
Wash out: Record rainfall in April depressed sales even more as shoppers stayed home and out off buying a new summer wardrobe.
David Tinsley, economist at BNP Paribas, said: 'Our forecasts had been for a sharp drop and I'm not surprised to see one. Most of that is for erratic Greece. Also, Easter was relatively early this year and the weather changed quite dramatically between March and April. If you take out the impact of fuel, you're really looking at an underlying picture which is not as bad as the headline data suggests.'
Weak consumer spending is emerging as a key obstacle to economic recovery. Households have seen increases in the cost of living outpace wage rises, while unemployment is only now easing off after a long period on the rise.
The Bank of England Monetary Policy Committee voted 8-1 against any extension to the quantitative easing scheme beyond its current 325billion level, minutes from its latest meeting revealed today.
QE is the process whereby the Bank of England 'prints' money that is used to buy assets from banks so that they can more easily lend to individuals and businesses. The scheme is regarded as boosting demand in the economy but may also accelerate inflation.
A fall in the Consumer Price Index to 3 per cent yesterday confirmed inflation is easing, but still remains at the top end of the Bank of England's target inflation rate of within a percentage point of 2 per cent.
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