Good weather, car fuel worries drive strong UK retail sales gain in March

LONDON – Warm weather and a spate of panic-buying for car fuel caused retail sales in Britain to surge by 1.8 per cent in March compared with a month earlier, official data showed Friday.

The figures released by the Office for National Statistics were well ahead of the market consensus of 0.5 per cent growth. They contrasted with a drop of 0.7 per cent in February, and encouraged hope that Britain’s economy returned to growth in the first quarter of the year.

Government warnings to prepare for a possible strike by tanker drivers set off a wave of panic buying of petrol, contributing to a 4.9 per cent gain in petrol sales during the month.

However, sales excluding fuel were also strong, rising 1.5 per cent.

“That growth is driven by sales of clothing and footwear suggests that this is largely down to the unusually warm weather in March, rather than the start of a stronger trend,” said Nida Ali, economic adviser to the Ernst & Young ITEM Club.

In late March, the government triggered panic over car fuel late by urging motorists to fill up to guard against a possible strike by tanker drivers over the four-day Easter holiday. On March 28, one minister advised people to keep extra supplies on hand at home in 20-litre (about 5 U.S. gallons) cans.

Drivers promptly lined up at service stations and drained them dry — although in the end there was no strike.

The fuel stockpiling of March is expected to mean less fuel will be sold in April. On a broader level, analysts remain cautious about whether consumer spending can remain robust.

“With wages continuing to fall in real terms, firms remaining reluctant to hire and a new wave of austerity hitting consumers in April, the foundations for a sustainable recovery in retail spending still seem to be absent,” said Samuel Tombs, U.K. economist at Capital Economics.

First-quarter GDP data will be released next week, with most British analysts expecting modest growth following a drop of 0.3 per cent in the last three months of 2011.