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UK retail sales slide in three months to February

Thursday, March 23, 2017 - 01:53

British retail sales in the three months to February recorded their biggest slide in nearly seven years as higher fuel prices eroded shopper's disposable income. David Pollard reports.

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New clothes - or dinner for two? In the battle for the British consumer's pound, it seems food is winning over fashion. 'Experiences' and eating out the new retail trend - if the trend for retail is down. With a 1.4 per cent drop, UK sales to February suffered their biggest three-monthly fall in nearly seven years. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "We've actually seen a lot more difficulty than we've seen for many years. And it would suggest that what we're seeing is finally the impact of inflation on the consumer is starting to be felt." Inflation is now at 2.3 per cent - after sterling's slide since the UK's Brexit vote. That's been good for some: a lower pound has pushed UK car production to a 17-year high on surging exports. It's not so good for others. The cost of imports going up - at the same time as fuel prices. Catching consumers in a double bind - potentially Brexit Britain's economy too. (SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "Real earnings are starting to turn negative. So I think if we are going to see the consumer being a little more reticent to maintain the rate of spending that we saw in Q3 and Q4, then we are going to see a deceleration in activity." And for companies like Next, it could force a rethink. Once the UK's top clothing retailer, annual profits are down nearly four per cent. It is, it says, 'extremely cautious' over the outlook. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "There does seem to be this shift with the consumer and how they want to spend their money .... And I think this is a big challenge at a time when the company is already facing challenges as a result of Brexit and as a result of higher inflation." Sterling bulls regained some of their appetite on the retail sales news. Focussing on February alone - when sales were up 1.4 per cent - and driving the currency up to a one-month high against the dollar. This one day when the pound had least had a bit more spending power ....

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UK retail sales slide in three months to February

Thursday, March 23, 2017 - 01:53