High Street slump as Iran war rattles consumers
Retail sales were hit last month as shoppers shunned car trips and clothes stores amid a cost of living squeeze caused by the Iran war.
Sales volumes dipped by 1.3 per cent in April compared to the previous month – a sign that the conflict in the Middle East is deterring households from spending.
It was the largest fall for nearly a year and was led by a sharp 10.2 per cent drop in fuel sales, according to figures from the Office for National Statistics (ONS).
Fuel prices have risen sharply after the war disrupted oil supplies, pushing the price of Brent crude above $100 a barrel.
The ONS stated the slump in demand for fuel is at its most severe since November 2020, during the Covid pandemic.
Retailers said motorists ‘were making fewer journeys and were delaying filling their fuel tanks while prices rose’, the ONS report revealed.
Cost of living squeeze: Retail sales were hit last month as shoppers shunned car trips and clothes stores
The month before, fuel sales had spiked as drivers stocked up in anticipation the conflict would drive up prices.
Even excluding fuel, retail volumes were still down by 0.4 per cent in April. Clothes shops saw a notable drop of 2.4 per cent due to bad weather as well as consumers becoming less willing to splash out.
Jacqueline Windsor, head of retail at PwC UK, said it showed April was ‘the first month that the impact of the Middle East conflict hit British consumers’.
The figures come days after data showed a brief respite from the cost of living squeeze in April as inflation fell to 2.8 per cent.
However, the pain is widely expected to worsen later in the year as energy bills soar and food prices also rise.
Harvir Dhillon, economist at trade body the British Retail Consortium, said: ‘We are starting to see signs that concerns over the Middle East conflict and its impact on living costs are leading shoppers to rein in their spending in many areas.’
Danni Hewson, of broker AJ Bell, said: ‘Initially, motorists rushed to fill up as the impact of the Iran war sent fuel prices higher, but as it became clear this was not going to be a short-lived spike, people have regulated their behaviour.
‘Non-essential journeys have been pared back as consumers once again think hard about how they’re going to spend every penny.’
Separate ONS data also delivered a grim update on the state of the public finances, with borrowing climbing to a worse-than-expected £24.3billion last month – £4.9billion, or 25 per cent, higher than the same month last year.
Ruth Gregory, deputy chief UK economist at Capital Economics, said: ‘The drop in retail sales volumes and the public borrowing overshoot in April highlights the deteriorating growth outlook and fragile fiscal backdrop that will face whoever is in 10 Downing Street.’
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