SCOTTISH retail sales in March were down sharply on a year earlier, industry figures show, fuelling worries that non-food retailers are suffering as consumers are hit by rising inflation in the grocery sector.
Food prices have been pushed higher by sterling’s weakness in the wake of last June’s Brexit vote.
The Scottish Retail Consortium’s latest monthly figures, published today, show the value of sales north of the Border in March was down 2.1 per cent on the same month of last year.
Food sales in Scotland in March were up by 1.8 per cent on a year earlier in value terms, driven by inflation. Figures published earlier this month by the British Retail Consortium and market researcher Nielsen put annual UK food price inflation at one per cent in March – the highest rate since February 2014.
But the value of non-food sales, the more discretionary element of consumer spending, was last month down by 5.2 per cent on a year earlier.
SRC director David Lonsdale said: “One trend is clear…Despite retailers’ efforts to absorb costs, the impact of the fall in sterling on commodity prices is now clearly being seen through food price inflation. That [has] contributed to improved food sales [growth] of 1.8 per cent.
“However, the concern is that consumers spending more on food are shifting spending from other items - potentially exacerbating the stresses affecting non-food retailers.”
Although the SRC noted the sales figures for last month would have been impacted negatively by the fact Easter fell in March in 2016, but in April this year, the picture north of the Border was again weaker than that in the UK as a whole.
Figures published last week by the British Retail Consortium showed UK retail sales value in March was down by 0.2 per cent on the same month of last year.
The SRC has flagged the boost to retail sales figures for the UK as a whole arising from the stronger economic and housing market performance in London and south-east England.
And experts have highlighted the broader impact of oil and gas sector weakness on the overall Scottish economy.
Economists have meanwhile expressed concerns over the ability of consumers in the UK as a whole to continue to support growth as inflation surges and pay rises remain weak, amid worries in the corporate sector over the impact of Brexit.
Craig Cavin, head of retail for accountancy firm and SRC survey sponsor KPMG in Scotland, said the year-on-year increase in food sales north of the Border in March “is in fact largely driven by food inflation”.
He added: “A 5.2 per cent year-on-year fall in total non-food sales appears drastic, but again the late Easter has taken its toll.”
While noting that bargains on big-ticket items such as furniture and white goods over the Easter weekend and a boost for children’s clothing during the school holidays should help bolster the April sales figures, Mr Cavin believed it was unlikely this would alter significantly the negative trend of recent months.
He noted that, over the three months to March, the value of Scottish retail sales had been down by 2.5 per cent on the same period of last year.
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