UK retail sales surge at the fastest rate in four years
Retail sales unexpectedly rose in March as shoppers were boosted by good weather, according to new data.
Retail sales volumes rose by 0.4 per cent in March 2025, following 0.7 per cent rise in February, according to the Office for National Statistics.
Quarterly sales volumes rose by 1.6 per cent quarter on quarter and 1.7 per cent year on year – the fastest rate in four years.
Sagar Shah, Associate Partner at McKinsey, said the figures were a “positive surprise”.
“It also marks the largest three-month rise in sales volumes since July 2021 – a sign there is some underlying resilience in shopper behaviour and the big discounts in the early part of the quarter brought back consumers,” Shah added.
Online prices for essential items fell by 1.5 per cent compared to February, while grocery prices fell around 2.5 per cent, according to Adobe Analytics.
“As retailers enter a period of increased operating costs and uncertainty, they will need to find the right balance between protecting their margins and keeping prices low enough to maintain the healthy levels of demand and online spending we’ve seen since the start of the year,” Vivek Pandya, lead analyst at Adobe Digital Insights said.
Matt Dalton, Consumer Sector Leader at Forvis Mazars, said: “Strong sales growth is a sign that the recent improvement in real incomes is finally translating into higher consumption.
“This was already evident in the last quarter of last year, when consumption was the larger contributor to economic growth.”
Dalton said that he was “moderately optimistic” about the next few months as the fundamentals of consumption – incomes, employment levels and household balance sheets – are healthy, but warned about the effect of rise in uncertainty.
“Surveys of consumer sentiment are beginning to show some cracks, with willingness to spend falling on the back of greater pessimism about the future of the economy,” he said.
“Households remain in a good place to ramp up spending with the savings rate extremely elevated and real wages rising. But the drop in consumer confidence suggests that households’ saving will remain elevated,” Thomas Pugh, economist at RSM UK, said.
“The combination of lower confidence and rising prices will be a significant headwind to further sales volumes growth,” Pugh said.