Retail sales came to a standstill last month as shoppers turned their backs on department stores due to rising prices

Retail sales came to a standstill last month as shoppers turned their backs on department stores due to rising prices.

But the flat performance follows a more impressive start to the year, meaning the sector should still help pull Britain out of recession.

The Office for National Statistics (ONS) said retail sales in March were unchanged from the previous month.

High Street department stores such as John Lewis were the biggest losers with sales down 3.8 per cent.

The stores reported that “higher prices were impacting trading,” ONS senior statistician Heather Bovill said.

Grocery sales also fell, although it was a better month for High Street shopping, where clothing and furniture retailers were able to post growth due to a rise in footfall. The stagnant performance in retail sales fell short of the 0.3 percent growth forecast by economists.

This follows growth of 3.7 percent in January and 0.1 percent in February.

Lisa Hooker, market leader for consumer markets at accounting giant PwC, said: ‘What is clear is that the first quarter of the year has been disappointing for many retailers.

“Lower inflation and the first 2 percent cut to national insurance that was reflected in January’s pay packages have yet to translate into a sustainable recovery in spending.” However, in the first three months of 2024, turnover was still 1.9 percent higher than in the previous quarter. That should help the broader economy emerge from the recession late last year, when GDP shrank for two quarters in a row.

It is only the second quarterly growth in retail volumes since early 2022, a period when consumers have faced painful cost-of-living pressures.

“Green shoots for retailers are starting to appear,” said Ellie Henderson, economist at asset manager Investec.

Alex Kerr of analyst Capital Economics said: ‘Although retail sales volumes that were unchanged in March were worse than expected, sales volumes still rose in Q1 (Q1) overall, ending the retail recession. And with inflation falling, we still think rising real household incomes will support retail activity in 2024.”

Separate figures this week showed inflation fell to 3.2 percent in March, the lowest level in two-and-a-half years, which Chancellor Jeremy Hunt said should mean people are “starting to feel the difference”.

A Deloitte survey yesterday showed that consumer confidence is at the highest level since the third quarter of 2021.

Falling inflation is providing relief for millions of households after a painful period in which inflation spiked to a four-decade high of 11.1 percent, while energy and food prices soared. Interest rates are expected to fall back to the Bank of England’s 2 percent target this spring, resulting in rate cuts.