Retail sales in March 2025 sustained a positive momentum, marking the third consecutive monthly rise with a 0.4 percent increase in volumes, 0.8 percentage points ahead of the consensus forecast. Over the year, retail sales rose 2.6 percent and 0.6 percent ahead of the forecast. This was driven by strong performances in non-food sectors, notably clothing and garden supply stores, which benefited from the UK's unusually sunny and dry March, the third sunniest on record.

Notably, clothing retailers thrived, bolstered by favourable weather conditions encouraging outdoor activities and purchases. However, the gains were partially undermined by a continued slump in food store sales, particularly in supermarkets, which fell 1.3 percent in March following a 2.2 percent drop in February. Online retail also contributed positively, with a 2.0 percent monthly rise in spending and an increase in the share of total sales from 26.4 percent to 26.8 percent, signalling sustained digital engagement by consumers.

Despite these improvements, total retail volumes remain marginally (0.3 percent) below pre-pandemic levels from February 2020, suggesting that while the sector rebounds, full recovery is still underway. The latest update takes the RPI to 20 and the RPI-P to 32, meaning that economic activities in the UK remain well ahead of market expectations.

Sales expected to recede by 0.4 percent on the month in March after jumping by 1.0 percent in February. The consensus looks for a 2.0 percent rise on year versus 2.2 percent in February.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.