(March 27): UK retail sales declined for the first time since November, with consumers reining in their spending even before the Iran war clouded Britain’s economic outlook.
The total volume of goods sold online and in stores fell 0.4% in February, according to the Office for National Statistics (ONS), reversing some of the gains made the previous month when retail sales surged by a revised 2%. It was the first drop in three months but not as bad as the 0.7% decline expected by economists.
The report suggests Britain’s shops entered a period of economic turbulence on a weak footing. Economists have already cut growth forecasts amid the Middle East conflict, with the Bank of England expecting an immediate impact of the petrol price shock on UK inflation. Britons are also facing an increase in electricity and gas bills when the energy price cap resets in the summer.
Sergey Kondratyuk, a partner at McKinsey & Company, said underlying demand “looks fragile”. He added that households were expecting to spend less on items such as furniture.
Supermarket sales dropped after rising in January 2026, the ONS report showed. Online retailers recorded declines in February, as shoppers likely bought more in at the start of the year to take advantage of discounts. Wet weather in February also led to sharp falls in household goods sales.
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Valentine’s Day on Feb 14 gave a small boost to gift sales, as shopping remained “highly selective and event-led”, according to Nicholas Found, head of commercial content at Retail Economics.
However, the energy price shock from the Middle East conflict is now front of mind for consumers.
Households are saving more and postponing big ticket purchases to soften the blow of an energy price shock, a separate GfK survey published on Friday showed. Fears of surging inflation pushed down sentiment to the lowest level under Prime Minister Keir Starmer’s Labour government in March, according to a British Retail Consortium survey.
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Next plc and Swedish fashion brand Hennes & Mauritz AB warned that a prolonged Middle East conflict could push up manufacturing costs, forcing them to raise clothing prices.
The ONS figures aligned with other reports showing weak retail sales in February, with the BRC noting that non-food sales recorded their steepest decline since May.
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