UK Retail Sales Rise in March Despite Global Trade Turmoil

Shoppers defy gloomy forecasts as consumer sentiment sinks and global tariff tensions escalate

Retail Sales Defy Expectations

UK retail sales unexpectedly increased by 0.4% in March, surprising analysts who had forecast a 0.3% decline. The latest figures, released by the Office for National Statistics (ONS), also show a 2.6% annual rise, outpacing February’s 2.2% and exceeding expectations of 1.8% growth.

This positive data stands out against a backdrop of consumer unease, largely sparked by US President Donald Trump’s recent trade tariff announcements. The strength in spending suggests British consumers are still opening their wallets—despite worsening sentiment.

Consumer Confidence Plummets

The British Retail Consortium (BRC) revealed a sharp drop in consumer confidence, with its sentiment index falling to -48 in April, down from -35 the previous month. This represents the lowest level in over a year.

Helen Dickinson, Chief Executive of the BRC, said the collapse in confidence came just days after Trump’s “Liberation Day” tariffs, which introduced minimum 10% tariffs on goods from key trading partners. “It is unsurprising that consumer expectations for the economy plummeted,” she noted.

US Tariffs Add Pressure to UK Government

The new tariffs have put the UK government in a tight spot, with Chancellor Rachel Reeves scheduled to meet US Treasury Secretary Scott Bessent to negotiate relief from the impact. A favourable agreement could help offset damage to UK trade and inflation.

Interest Rates and Inflation Outlook

Despite persistent inflation, the Bank of England held interest rates steady at 4.5% in March. However, markets now expect a rate cut in May as growth slows.

The International Monetary Fund (IMF) has forecast the UK to have the highest inflation among advanced economies in 2025, at 3.1%, driven partly by global tariff effects. Economic growth has also been revised down to 1.1% from 1.6%.

What Does This Mean for the UK Economy?

• Retail sales are stronger than expected, offering short-term relief for the economy.
• Consumer sentiment is fragile, suggesting spending may slow in the coming months.
• Trade tensions and inflation remain key risks, both domestically and globally.
• Monetary easing is likely, with rate cuts expected to stimulate a slowing economy.

Conclusion

March’s retail sales figures offer a surprising boost for the UK economy, but they mask growing concerns beneath the surface. With global trade disruptions, weakening consumer confidence, and a challenging inflation outlook, the UK’s economic resilience will likely be tested further in the months ahead.

Whether this consumer strength can be sustained depends heavily on how successfully the government navigates trade negotiations—and whether monetary policy shifts can stabilise inflation without stalling growth.

Sources: (Investing.com, Reuters.com)