Wet weather adds to cost of living gloom as retail sales dip
A dip in retail sales last month could be mainly explained by a hit of poor weather, according to experts.
The Office for National Statistics (ONS) said retail sales volumes fell by 0.9% in March – the first month on month decline of the year to date and worse than the 0.5% decline forecast by economists.
It reported that feedback from retailers pointed to the weather as being the main factor behind a 1.3% drop in non-food sales compared to the previous month.
The performance also reflected the continuing impact of inflation on shoppers’ budgets, with separate ONS data released earlier this week highlighting the highest food inflation since 1977.
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Food inflation at 45-year high
Food volumes, the ONS data showed, eased by 0.7%.
It added that output in the retail sales sector was 0.6% up in the first quarter of the year, when compared with the previous three months.
ONS director of economic statistics, Darren Morgan, said: “Retail fell sharply in March as poor weather impacted on sales across almost all sectors.
“However, the broader trend is less subdued, as a strong performance from retailers in January and February means the three-month picture shows positive growth for the first time since August 2021.
“In the latest month, department stores, clothing shops and garden centres experienced heavy declines as significant rainfall dampened enthusiasm for shopping.
“Food store sales also slipped, with retailer feedback suggesting the increased cost of living and climbing food prices are continuing to affect consumer spending.”
The figures are important as consumer spending is the largest component of the UK economy – currently flatlining, though seen by the Bank of England as swerving recession without further shocks.
It is widely tipped to introduce a 12th consecutive rise in Bank rate next month to maintain its battle against stubborn inflation, adding to borrowers’ costs further.
But there is evidence that the outlook for consumer spending is brightening, despite the tough economy.
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Another interest rate rise ‘almost a done deal’
A closely-watched survey of consumer confidence showed people were their most upbeat this month since February last year, when Russia invaded Ukraine.
GfK’s Consumer Confidence Index rose for the third month in a row but still remained in negative territory at -30.
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Respondents were said to have a more positive view of their finances and the health of the wider economy.
Joe Staton, GfK’s client strategy director, said: “The brighter views on what the general economy has in store for us… could even be seen as the proverbial green shoots of recovery.”
Business
Energy bills to rise again from January but spring falls to come, research firm Cornwall Insight forecasts
Energy bills are to rise again next year, according to a respected forecaster.
Costs from January to March are projected to rise another 1% to £1,736 a year for the average user, according to research firm Cornwall Insight.
The energy price cap, which sets a limit on how much companies can charge per unit of electricity, is also expected to rise, costing typical households an extra £19 a year.
It’s a further increase after energy costs rose 10% from October.
After the latest hike, there were hopes of a fall in the new year, but volatile wholesale gas and electricity markets are still above historic average costs.
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Prices have gone up due to supply concerns arising from Russia‘s war in Ukraine, and maintenance of Norwegian gas infrastructure.
But spring is expected to herald a reduction as is October 2025, Cornwall Insight said.
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Every three months energy regulator Ofgem revises the cap based on wholesale costs.
The official January price cap announcement will be made on Friday.
It comes as millions of pensioners lost their automatic winter fuel allowance payment after the government means-tested the benefit.
Meanwhile, Cornwall Insight’s principal consultant Dr Craig Lowrey warned “millions” of households won’t heat their homes to “recommended temperatures, risking serious health consequences” with bills on the rise.
“With it being widely accepted that high prices are here to stay, we need to see action,” he said, suggesting options like cheaper rates for low-income homes, benefit restructuring, or other targeted support for the vulnerable “must be seriously considered”.
The energy price cap system is being reviewed by Ofgem with possible changes to the standing charge coming over the next year.
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The long-lasting solution to high energy bills is the transition to UK-produced renewable power, the firm said.
“While there will be upfront costs, this shift is essential to building a sustainable and secure energy system for the future.”
The owners of Scotland’s only oil refinery have rejected a US-led approach about a possible bid for it months before its scheduled closure.
Sky News has learnt that a consortium said to be led by Robert McKee, an American energy industry veteran, wrote to Petroineos, the owner of the Grangemouth site, to express an interest in buying it.
The approach, which is understood to have been made earlier this month, was rejected by Petroineos, which is 50%-owned by the petrochemicals empire founded by the Manchester United FC shareholder Sir Jim Ratcliffe.
The consortium is understood to comprise The Canal Group, which is reportedly developing a green energy refinery in Texas, and Trading Stack, a Middle East-based commodities trader.
Mr McKee spent nearly four decades with ConocoPhillips, one of the biggest energy companies in the US.
Sources close to the situation said that Petroineos had rebuffed the offer in order to concentrate on a publicly announced plan to transform the century-old plant into a finished fuels import terminal.
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They added that the nature of the consortium’s approach had raised questions about its access to financing and expertise in operating an asset of this kind.
The Grangemouth refinery, which employs about 450 people, loses about £200m annually.
Its other shareholder is the state-backed Chinese energy giant PetroChina.
The site is due to close next year.
A person close to the consortium insisted that its financing was robust and said it would assess the feasibility of building a new refinery elsewhere in the area.
They added that the consortium had had “positive interactions” with trade union officials, and believed that there was scope to rapidly make Grangemouth’s refinery operations profitable.
On Monday, a spokesman for Petroineos said: “Since the Petroineos joint venture was formed 13 years ago, our shareholders have invested nearly £1bn in the refinery, only to absorb losses of £600m.
“Last week, the refinery lost £385,000 on average each day and we expect to lose more than £150m in total during the course of this year.
“We have not received any credible or viable bids for the refinery.”
A spokesman for the consortium declined to comment.
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