Forecast: Rising costs expected to hamper retail sales figures

The impact of the cost-of-living crisis is expected to be reflected in latest retail sales figures out this week.

Although the data for March will cover the period before higher energy, council tax and broadband bills kicked in, consumer confidence is likely to have been hit by the prospect of cost increases ahead.

Russ Mould, investment director at AJ Bell, said the impact of rising inflation can already be seen through an alternative economic indicator known as the “Misery Index”, which adds the unemployment rate to the inflation rate

Mr Mould said: “The jobless rate is close to modern-day lows, so inflation is the reason the Misery Index is rising... standing at multi-decade highs. Inflation is taking its toll because price rises are outstripping wage growth. That, in turn, is already hitting consumer confidence.”

He also said inflation may not be the “only villain of the piece”, given the rising number of Omicron-variant Covid cases and the Russian invasion of Ukraine, but higher prices and their effect on real-terms wages and spending could be a major factor.

“This will be a concern for retailers, especially those of big-ticket items. If confidence sags, so could spending on more discretionary items,” he also stated.

Figures out last week showed the squeeze on households tightened last month as rapidly rising food and fuel prices sent inflation to another 30-year high, even before energy bills spiked.

The impact of rising costs is expected to be reflected in the latest retail sales figures, for March. Picture: AFP via Getty Images.

The Office for National Statistics said consumer prices index inflation rose 7 per cent in the year to March, up from 6.2 per cent in February.

A message from the Editor:Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription: www.scotsman.com/subscriptions