By Suban Abdulla
LONDON (Reuters) -British retail sales stagnated in March despite high inflation easing recently, representing the first time that they have not grown in monthly terms since December, the Office for National Statistics said on Friday.
Economists polled by Reuters had mostly forecast sales volumes would increase by 0.3% on the month.
But the ONS said sales volumes showed no growth after rising by an upwardly revised 0.1% in February.
Rises in automotive fuel sales - which were the highest since May 2022 - and non-food store sales were offset by falls in food stores and online and other non-store retailers, the ONS said.
Sales volumes excluding fuel sales were down 0.3% on the month.
"What is clear is that the first quarter of the year has been disappointing for many retailers," said Lisa Hooker, leader of industry for consumer markets at PwC. "Lower inflation and the first 2% cut to National Insurance, which was felt in January’s pay packets, has yet to translate into a sustained recovery in spending."
Finance minister Jeremy Hunt - hoping to boost the chances of the ruling Conservative Party in an election expected this year - introduced a second social security tax cut in April after the initial January cut.
There have been some encouraging signs recently from leading UK retailers.
Tesco (OTC:TSCDY), the country's biggest supermarket group, and clothing group Next both highlighted an improving consumer outlook and forecast profit growth for 2024. Home improvement retailer Kingfisher (LON:KGF) warned on profit but said its UK operations were performing better than in France.
Sterling fell briefly against the U.S. dollar and the euro immediately after the retail figures were published.
British consumer price inflation was its slowest in two and a half years in March although it fell by less than expected as motor fuel prices rose, tempering market expectations about the scale of Bank of England interest rate cuts this year.
Friday's figures contrasted with some business surveys that showed a pick-up in retail sales in March.
Compared with a year ago, the ONS data showed sales volumes were 0.8% higher. They rose by 1.9% from the previous three months, the biggest such increase since mid-2021, boosted by a leap in sales in January.