UK retail sales to fall in March as consumers cut spending
The Office for National Statistics is slated to publish retail sales data on Friday.
UK retail sales volume including auto fuel is forecast to drop 0.2% month-on-month in March, reversing a 1.4% rise in February.
If retail sales did fall 0.2% on month, they would have contracted 1.1% sequentially in the first quarter, the economist said.
"Even allowing for the fact that consumer spending has held up markedly better on services so far, this would still point to markedly weaker consumer spending weighing down on GDP growth in the first quarter," said Archer.
Archer still believes GDP growth could well have slowed to 0.4% sequentially in the first quarter from 0.7% in the fourth quarter.
There is also a strong likelihood that consumer confidence and willingness to buy major items will soften - as it is not only pressurized by weakening purchasing power but also by increasing concerns over the economy and jobs, Archer noted.
The fundamentals for consumers look odds-on to weaken markedly further over the coming months as rising inflation eats further into purchasing power with the squeeze reinforced by muted earnings growth, the economist added.
It is also very possible that consumers will face a weakening labor market over the coming months, he observed. ■