LONDON-U. K. retail sales fell steeply on the month in March, data showed Friday, as price increases fueled by the pound's sharp post-Brexit vote depreciation caused Britons to rein in spending.
Sales in March fell by 1.8% from the previous month, the Office for National Statistics said, significantly more than the 0.1% fall predicted by analysts polled by The Wall Street Journal. Compared with March last year, sales rose by 1.7%, also significantly below analysts' expectations.
Quarterly sales fell by 1.4% in the first three months of the year, the fastest pace of decline in seven years. This means that the retail sector made a negative contribution to the U.K.'s quarterly economic growth for the first time since late 2010, the ONS said.
The pound's steep depreciation in the wake of the Brexit vote in June last year is fueling price increases after a prolonged period of low inflation.
As wage growth struggles to keep up with inflation, which continued to grow at the fastest pace in over three years in March, British shoppers are starting to watch the pennies and curb spending, a key engine of growth for the U.K. economy.
This comes at an awkward time for the U.K. government, which began the country's exit from the European Union last month.
Write to Wiktor Szary at Wiktor.Szary@wsj.com
(END) Dow Jones Newswires
April 21, 2017 04:48 ET (08:48 GMT)