There was bad, if not entirely unexpected news for the UK retail sector, with the release of the latest Retail Sales Monitor from BRC/KPMG. Sales were down 1.9 percent, year-on-year, in March of this year, which is the biggest fall recorded since the study began in 1995.
There are one or two mitigating factors; most notably that March 2010 was exceptional due to Easter coming early. But a combination of continued macroeconomic uncertainty and the public-sector austerity measures have apparently made punters reluctant to splash the cash.
"This is the worst drop in total sales since we first collected these figures in 1995. Non-food retailers were particularly hard-hit. This is strong evidence of the pressure customers and traders are under. This year's later Easter is a factor but this fall goes way beyond anything that can be explained by that alone.
"Uncomfortably high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for thirty years. Mounting fuel and utility costs, falling house prices, higher VAT and the prospect of more tax rises and job losses left people unwilling to spend unless they really had to. These pressures aren't going away and the arrival of higher National Insurance is likely to compound them in the immediate future.
"The next interest rate decision is a difficult balancing act for the Bank of England but, for now, supporting our weak economy must be the priority. Inflation is coming mainly from temporary and external price shocks - VAT, world commodity prices and the weak pound - not wage or consumer-driven increases. Increasing interest rates would do more harm than good."
The BoE's interest rate decision will be further complicated by the fact that inflation fell to only four percent last month, alleviating some of the pressure to raise them. Much of this fall could be attributable to exceptionally weak consumer spending, however, and many commentators think rates will rise regardless.
The BRC also felt moved to comment on a new initiative from the government today. It's called ‘Better Choices, Better Deals: Consumers Powering Growth', and seems to be a drive to give consumers more data to inform their decisions. One example given of such a source of empowerment was the recent Billmonitor study.
You can read the full 56-page document below in the unlikely event of you having nothing better to do, but here's what Tom Ironside from the BRC had to say about it: "This wide ranging document includes some interesting ideas that could support action retailers are already taking, in response to demand from customers, in areas such as providing nutritional and environmental information on food and other products.
"Our members have well developed relationships of trust with their customers. They seek and receive extensive feedback. Pledges to ‘empower' shoppers must not translate into pointless and burdensome new obligations. A light-touch, non-regulatory approach is welcome but voluntary agreements or Responsibility Deals can end up imposing the same burdens as formal legislation. They must be used with care."