This article is more than 4 months old

This article is more than 4 months old

UK retail sales in recorded their largest fall on record in March as consumers were forced to restrict their shopping trips under the government lockdown.

Amid concerns the economy could experience its biggest contraction in several centuries, the fall in retail sales of 5.1% compared with the previous month exceeded the already downbeat expectations of City analysts, who forecast a 4% slide for March.

Only panic-buying of food and freezers before the lockdown and household goods purchased bought online prevented a bigger slump, leading to predictions of a fall of up to 30% in April when the full impact of the government’s restriction measures will be felt.

The Office for National Statistics said store closures had hit sales of furniture and home furnishings and especially clothing, which dived by 35% month on month. Petrol sales declined by 19% month on month.

Quick guide UK government support for workers and businesses during the coronavirus crisis Show Hide Income subsidies Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees. Loan guarantees for business Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies. Business rates Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms. Cash grants Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000. Benefits Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits. Sick pay Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills. Other Local authorities to get a £500m hardship fund to provide people with council tax payment relief. Mortgage and rental holidays available for up to three months.

The latest blow to high street sales came after a torrid 12 months in which many chains have gone to the wall and others shut stores in towns across the country.

Before the lockdown, retailers’ profit margins had been hit by a combination of competition, rising business rates and escalating rents. Brexit uncertainty, which dampened consumer confidence, had also hit sales of “big ticket items” such as cars.

Last month the chancellor, Rishi Sunak, announced a raft of measures to protect businesses from the worst of the Covid-19 fallout, including a business rates holiday. On Friday, the government banned commercial landlords from “aggressive rent collection”. This should help many retailers that have fallen behind with payments over recent months.

But the measures are not expected to prevent a further decline in the number of businesses on the high street after the lockdown is lifted. Shoppers, who have become used to shopping online, may continue to maintain deliveries of food and other items instead of visiting bricks and mortar shops.

Revealing a strong divergence in sales, food, household goods and other non-food items all increased sales by value on the month by 15.3%, 18% and 16.4% respectively, the ONS said.

Supermarkets reported a strong increase in volume sales, at 10.3%, while off-licence sales of alcohol soared 31.4% in volume terms. Online sales jumped to more than 22% of all sales, compared with an average of 18% over the last year.

Department store sales rose by 2.8% month on month, though the increase appeared to be due to purchases of food and other items online.

The ONS said: “Comments from food store retailers suggested that panic-buying, or stockpiling during the coronavirus pandemic, was a big factor in the increased sales, particularly for supermarkets.”

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The ONS also confirmed that April was likely to bring even bigger falls. It said retailers responded to its survey between 1 March and 4 April 2020, meaning that two weeks of the five-week trading period were under physical distancing measures introduced before the lockdown.

Thomas Pugh, an economist at consultancy Capital Economics, said: “With widespread lockdowns only beginning around the middle of March, retail spending looks like it will fall by much more in April, perhaps around 20-30% month on month.

“Clearly there is huge uncertainty as to how deep the downturn proves and how long restrictions remain in place, a fall in the region of 25% in GDP over the next few months seems likely.”

﻿Ian Geddes, head of retail at Deloitte, said that while a rush to remote working fuelled sales of home office equipment, and consumers bought home gym equipment, the situation was dire for many retailers.

“The combination of a UK-wide lockdown, closure of many physical stores, and consumer confidence at a historic low, has posed a significant challenge to all retailers, albeit with differing consequences across retail sectors.

“Those trading in essential goods, particularly food, have seen sales increase by 3.9%, month-on-month, while the non-food category has seen the greatest decline as lockdown measures pressed an indefinite pause on the UK high street.”