U.K. Retailers Say Consumers are `Cautious' as Sales Weaken

(Bloomberg) -- U.K. retailers offered further evidence on Tuesday that they may be in for a tough year.

Amid warnings that faster inflation will squeeze consumers, the British Retail Consortium said the last three months saw the first annual drop in non-food sales since 2011. Food sales increased 2 percent in the three-month period, the BRC data showed.

Official statistics also show that retail sales are falling, while consumer credit remained below its average at the start of the year, according to Bank of England data last week. Inflation picked up to 1.8 percent in January, from 1.6 percent, and is forecast to push close to 3 percent by year end, which will eat into real income growth.

On a like-for-like basis, the BRC said retail sales fell 0.4 percent in February from a year earlier, following a 0.6 percent decline in January.

There's an “undeniable trend of cautious spending on non-essential items,” said BRC Chief Executive Helen Dickinson. “Tougher times are expected ahead. The impact of inflation on consumer spending will add further intensity to an already fiercely competitive environment.”

--With assistance from Mark Evans

To contact the reporter on this story: Fergal O'Brien in London at fobrien@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Lucy Meakin, Brian Swint