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The High Street has suffered its worst month for more than 40 years as the Iran war hits households already reeling from higher taxes with a fresh inflation shock, bleak figures show.
In a report that will fuel fears over the impact of the conflict on the UK economy, the Confederation of British Industry (CBI) said retail sales volumes have fallen by the most on record.
The CBI said 77 per cent of firms surveyed reported that sales volumes were lower this month than in April last year while just 9 per cent saw a rise.
The balance of minus 68 was the lowest since the series began in 1983 and highlighted the crisis engulfing the High Street.
Shopkeepers are also gloomy about the future with expectations for May the darkest since March 2021 during the Covid-19 pandemic.
Shoppers have reined in spending in a blow to high streets across Britain
The slump in sales came even as retailers slashed prices in bid to boost business – sparking warnings that shoppers are yet to feel the ‘full force’ of the Middle East conflict.
The war in Iran has sent the cost of petrol and diesel soaring and threatens to push up energy bills and other essentials such as food.
Households have also been hit by increases in council tax this month along with higher water bills as well as broadband and mobile phone costs.
At the same time, employers are grappling with increases in the minimum wage and business rates bills on top of last year’s national insurance tax raid.
‘It’s now fairly widely recognised that the level of tax in the UK has got too high,’ said Phil Kinzett-Evans, a partner at accountancy group UHY Hacker Young.
‘Businesses need to see a sensible economic plan that sees a reduction in the business tax burden.’
Tory business spokesman Andrew Griffith said: ‘These figures show the true scale of the April Armageddon caused by the combination of the Chancellor’s policies and global uncertainty.
‘Yet rather than act, the government keeps piling on more tax and red tape. Conservatives are serious about backing business but many cannot wait for a general election. They need action now.’
A separate report from the British Retail Consortium (BRC) found shop prices rose by less than feared this month on the back of heavy discounting by retailers battling to boost business.
Shop prices overall are 1 per cent higher than last April, down from a 1.2 per cent increase in March, the report said, with food price inflation dipping from 3.4 per cent to 3.1 per cent.
But experts warned of worse to come.
BRC chief executive Helen Dickinson said: ‘With weakening consumer confidence, retailers competed harder on price to stimulate more spring spending.
‘Food price inflation also slowed as retailers offered discounts on Easter items such as chocolate.
‘While we’re yet to see the full force of the Middle East conflict feeding into consumer prices, it will not be long before it begins to.’
Mike Watkins, head of retailer and business insight at market research group NIQ, said: ‘Increased fuel prices are already leading to higher inflation and we can expect a similar impact in the food and non-food supply chains in the months to come.
‘Retailers will look to hold back any price increases as long as possible as alongside fragile consumer confidence, accelerating inflation is likely to negatively affect consumer spending.’
The CBI called on the government to stop new workers’ rights laws pushing up the cost of doing business and to lower electricity bills.
‘With the economic impact of the Iran conflict becoming clearer, firms will be looking to government to recognise that easing cost of living pressures depends on tackling the cost of doing business,’ said CBI economist Martin Sartorius.
The lobby group also branded the business rates system a ‘growth killer’ that taxes ambition and acts as ‘a major brake on investment’.
Warning that the levy on commercial property ‘is clearly not fit for purpose in a competitive, modern economy’, it said reforming the tax ‘is no longer and nice to do’ but ‘an economic necessity’. ENDS
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