Online shopping dropped 7.9% in March while fuel sales fell 3.8% amid soaring petrol and diesel cost

Online shopping dropped by 7.9 per cent in March, while fuel sales plunged 3.8 per cent amid soaring petrol and diesel costs – as Britons tighten their purse strings as the cost-of-living crisis starts to bite.

Food store sales also fell last month, continuing a downward trend since November, with more than half of food production businesses saying they have been affected by ‘recent increases in energy prices’.

Overall retail sales dropped by 1.4 per cent, led by a 7.9 per cent fall in online sales, according to the Office for National Statistics (ONS).

It comes as households are cutting down on discretionary spending ‘with the rises in the cost of living hitting consumers’ spending’.

The number of fuel sales also dropped by 3.8 per cent over March as rising petrol and diesel costs discouraged drivers from making unnecessary journeys.

And more than a quarter of businesses reported their production and suppliers were affected by recent increases in energy prices in early April 2022 in the wake of Russia’s invasion of Ukraine.

That included 56 per cent of accommodation and food service firms reporting they had been impacted by energy costs.

It comes after new figures published this week showed the prices of basic items including eggs, milk and fruit have all risen by more than seven per cent since April 2021.

In the wake of the news this morning, the pound slumped more than one percent against the dollar. In London morning deals, sterling sank to $1.2887 – its lowest level since October 2020.

Overall retail sales dropped by 1.4 per cent, led by a 7.9 per cent fall in online sales (shown above), according to the Office for National Statistics

Overall retail sales dropped by 1.4 per cent, led by a 7.9 per cent fall in online sales (shown above), according to the Office for National Statistics

Cost of tomatoes soar amid heavy rain in Spain and lorry driver strikes 

Poor weather, striking lorry drivers have led to a rise in prices and shortage of tomatoes in UK supermarkets.

The price has soared by almost 60 per cent in the past year, while there are also fewer options on the shelves in what trade bosses have described as a ‘cocktail’ of problems.

UK-grown tomatoes are down because they rely on glasshouses heated to 20C, but many producers have reduced growing times due to soaring energy prices in the wake of Russia’s invasion of Ukraine, according to trade journal The Grocer.

The two biggest exporters to Britain – Spain and Netherlands – have also been hit by energy bills, but Spain’s crops have been affected by heavy rain and a lorry drivers’ strike over the rising cost of fuel and delays at UK border control due to heavy congestion at Dover.

Morocco, another major supplier of tomatoes, has banned export of the fruit during Ramadan to keep its local market supplied and avoid shortages of what is considered a vital meal for those breaking the fast during the Holy festival.

Prices have been rising steadily in Britain. Cherry tomatoes are now 58 per cent more expensive in shops than this time last year, according to analysts Mintec.

The UK’s production of tomatoes is gradually rising with more glasshouse operations and better technology to try and provide the country with homegrown produce all year round.

But half of the UK’s glasshouses have been left empty for longer to save money, Julie Woolley of the British Tomato Growers’ Association says.

The UK currently imports around 80 per cent of its tomatoes, but is hoping to grow more of its own using new technology including vertical growing.

Julie Woolley added: ‘Ultimately the drive here is to enable UK growers to produce more tomatoes for our own market, enabling us to invest in long-term plans around sustainable energy solutions.

‘We know we can provide the best quality and best tasting tomatoes for our own local market and we urge consumers to continue seeking out British grown tomatoes at their local retailers.’

ONS director of economic statistics Darren Morgan said: ‘Retail sales fell back notably in March, with rises in the cost of living hitting consumers’ spending.

‘Online sales were hit particularly hard due to lower levels of discretionary spending.

‘Fuel sales also fell substantially, with evidence suggesting some people reduced non-essential journeys, following record high petrol prices, while food sales continued to fall, dropping for the fifth consecutive month.”

Recent surveys also found that 54 per cent of adults have reported spending less on non-essentials due to an increase in the cost of living, the ONS said.

It also suggested the fall in online sales may be linked to shoppers feeling more confident returning to stores after the Omicron Covid variant rapidly spread across the UK in December and January.

Food store sales fell 1.1 per cent last month, with cost of living concerns causing households to cut back on excessive food purchases and becoming more meticulous with what is being stocked in the kitchen.

The ONS said this decrease was also down to more shoppers preferring to spend their cash on eating out and socialising in pubs and restaurants after months of eating at home through lockdowns.

An ONS survey last month found that 87 per cent of adults reported their cost of living had increased, with the most common reason given being a rise in the price of food shopping.

Oliver Vernon-Harcourt, head of retail at Deloitte, said: ‘The next few months will see further disruptions to supply chains and cost pressures.

‘Consumers will also feel the pinch, particularly around discretionary spending, with April seeing the introduction of energy price cap rises and national insurance increases. 

‘The retail industry will need to balance increasing costs with maintaining customer engagement.’

Helen Dickinson, chief executive of the British Retail Consortium, added: ‘The cost-of-living squeeze has many consumers thinking twice about major purchases, while their expectations of future financial situation plummeted to lows not seen since the financial crisis.

‘Consumers face even more challenges as the energy price cap rose to a record high this month.’

She continued: ‘Retailers are themselves squeezed between rising costs of operations, exacerbated by the situation in Ukraine, and weaker demand from customers.

‘Higher global commodity prices, rising energy and transport costs, and a tight labour market are all taking their toll. As a result, it is likely that retail prices will continue rise over the course of 2022.’ 

The only area of retail to see a rise in sales last month was non-food stores, up 1.3 per cent, driven by a rise at household goods retailers including garden centres and DIY stores.

Elsewhere, the average house price in the UK has shot up 10.9 per cent over the year to February.

A typical property was £277,000 last month, £27,000 higher than February 2021, according to ONS data.

Britons are paying almost £3 more for an average 20 item shopping basket than 12 months ago, analysis of new data shows. Pictures are for illustrative purposes and are not the actual price of each item. The data comes from price comparison website Trolley.co.uk. The data is from April 2021 to April 2022 and prices are an average of all items of that type across all of the UK's major supermarkets. Categories also include small and larger sizes - meaning beans include packs of up to six while beer includes packs of up to 18

Britons are paying almost £3 more for an average 20 item shopping basket than 12 months ago, analysis of new data shows. Pictures are for illustrative purposes and are not the actual price of each item. The data comes from price comparison website Trolley.co.uk. The data is from April 2021 to April 2022 and prices are an average of all items of that type across all of the UK’s major supermarkets. Categories also include small and larger sizes – meaning beans include packs of up to six while beer includes packs of up to 18

Consumer experts have warned Britons to brace for a 2.2 per cent rise in the average cost of crisps within six months. Pictured: A graphic showing how prices on could look if there is a 2.2 per cent price rise. *Current prices are based on non-deal prices from Tesco according to comparison website Trolley.co.uk as of April 18, 2022 **Six month prices are estimates based on current prices with a 2.2 per cent increase, rounded up and down to the nearest pence

Cost of living crisis and war in Ukraine slams brakes on Britain’s economic recovery as IMF slashes growth forecasts once again 

The cost of living crisis and war in Ukraine will slam the brakes on Britain’s economic recovery from the pandemic in the years to come, the International Monetary Fund warned today. 

The body slashed its growth forecasts for Britain and the rest of the world as it cautioned that inflation is set to remain elevated ‘for much longer’ than previously expected, hampering consumer spending – the main driver of the economy. 

Britain’s gross domestic product is now expected to grow by 3.7 per cent this year, down from the 4.7 per cent growth predicted by the IMF at the start of the year and a further downgrade from its 5 per cent October forecast.  

In its latest World Economic Outlook update, the IMF has also downgraded its expectations for next year to 1.2 per cent, from a 2.3 per cent estimate in January – the slowest rate for any ‘advanced’ economy.

‘In the United Kingdom, consumption is projected to be weaker than expected as inflation erodes real disposable income, while tighter financial conditions are expected to cool investment,’ the body said. 

It comes as Britain’s economy was only starting to recover from the pandemic, having grown by 7.4 per cent last year after shrinking by 10 per cent in 2020, when Covid-19 restrictions brought many businesses to a halt.

Temporary changes to stamp duty, land and buildings transaction tax and land transaction tax have all been cited as reasons for sellers demanding higher prices due to buyers’ overall costs having been reduced.

Private rental prices were also up 2.4 per cent over the year, though the 0.4 per cent increase in London was the lowest of any region in the UK.

It comes as new figures, released this week, show how prices of basic items including eggs, milk and fruit have all risen by more than seven per cent since April 2021.

Other essentials, including butter, beans and toilet roll, have all seen price rises of more than 10 per cent over the last 12 months, according to comparison site Trolley.co.uk’s Grocery Price Index.

Meanwhile, packets of dried spaghetti, a staple in most cupboards, and often used as a bulky meal for parents working on a tight budget, have seen price rises of 13.6 per cent since last year, according to the website.

Analysis of the data by MailOnline shows how a 20 basket item for essentials and regularly purchased items now costs £2.82 more than it did in April 2021. 

Energy bosses also this week demanded Chancellor Rishi Sunak offer ‘unprecedented’ help for Britons as they warned of a ‘truly horrific’ situation this autumn – as one even suggested the poorest should get £1,000 slashed from their energy bills.

Households, who have already seen a huge rise in their bills this month, are braced for another massive hike in October due to the ongoing energy crisis.

Appearing before MPs, the bosses of the UK’s largest energy companies urged the government to prepare for yet another shock increase by offering further support to hard-pressed Britons.

They detailed ‘a huge amount of anxiety’ among their customers, warned more than one-third of Britons could be pushed into fuel poverty, and said the worst-hit could end up paying as much as £1 in every £6 on their energy bills. 

MPs also heard how debt levels were already soaring, even ahead of October’s expected next increase.

The energy bosses called on Mr Sunak and the Treasury to extend existing help for households, but also to go further by scrapping green levies on energy bills, cutting VAT on gas and electricity and also to consider a deficit fund to remove £1,000 from the bills of the most vulnerable.