Food store sales volumes fell by 0.7% in March 2023, following a rise of 0.6% in February 2023, amid ongoing cost-of-living and inflationary pressures.
According to new data from government department the Office for National Statistics (ONS), retail sales volumes are also estimated to have fallen by 0.9% in March 2023, following a rise of 1.1% in February 2023.
However, fuel sales volumes rose by 0.2% in March 2023, following a fall of 1.2% in February 2023; sales remain 8.5% below their pre-COVID-19 February 2020 levels.
Food and drink prices also soared at the fastest annual rate in over 45 years to 19.1% in March, keeping UK inflation above 10%.
Subscribe to Grocery Gazette for free
Sign up here to get the latest grocery and food news each morning
“The 0.9% decline in retail sales volumes in March was unsurprising as the sustained inflationary environment continues to leave consumers cautious about spending across food and non-food retail. Increasing food prices are forcing consumers to make choices to buy less as they pay more,” EY UK&I retail lead, Silvia Rindone, said.
“However there may be a light at the end of the tunnel as the ‘three-month’ trajectory indicates that sales volumes rose in the three months to March 2023, the first quarterly rise since August 2021.
“As we enter spring, the Easter holidays and the various bank holiday weekends, should continue to drive food sales, however retailers must remain cautious with how sustainable this is as household disposable income continues to be squeezed.
“Retailers should take this into consideration when developing their value proposition. They will need to navigate a tight balance between rising costs and deciding how far they continue to pass on price increases without impacting the top line.
Rindone added: “In an environment of slow volume growth, working capital and range/pricing decisions remain the most important considerations for retailers.”
Head of Retail at Accenture in the UK & Ireland, Lynda Petherick commented: “After promising sales last month, this drop suggests that it’s back to reality for retail businesses, as they continue to weather a difficult environment.
“With inflation remaining above 10%, food prices still rising, and interest rates expected to increase again next month, shoppers will be keeping a close eye on their finances, putting further pressure on retailers to generate sales.
“With spring in full swing, brands need to find some positive momentum and give consumers every reason to shop with them during the more lucrative warmer months, so getting their pricing and customer experience right will be crucial.
“Many retailers will also be hoping that the Easter trading period and upcoming Coronation will be another reason to celebrate,” Petherick added.
