The BRC has reported that UK sales values in March were down 1.9 per cent year-on-year, when sales had risen 6.6 per cent. On a like-for-like basis, sales for last month crashed by 3.5 per cent.
Non-food non-store (internet, mail-order and phone) sales growth also slowed in March. Sales were 7.5 per cent higher than a year ago, the smallest increase since the records began in October 2008 and much weaker than the 10.4 per cent rise in February.
The BRC blamed a fall in consumer confidence, saying that for the first time in 30 years, high inflation rates and low wage growth have caused a year-on-year fall in disposable incomes.
Stephen Robertson, director general, British Retail Consortium, commented: “This is the worst drop in total sales since we first collected these figures in 1995. Non-food retailers were particularly hard-hit. This is strong evidence of the pressure customers and traders are under.
"This year's later Easter is a factor but this fall goes way beyond anything that can be explained by that alone.
"Uncomfortably high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for 30 years. Mounting fuel and utility costs, falling house prices, higher VAT and the prospect of more tax rises and job losses left people unwilling to spend unless they really had to. These pressures aren't going away and the arrival of higher National Insurance is likely to compound them in the immediate future.
"The next interest rate decision is a difficult balancing act for the Bank of England but, for now, supporting our weak economy must be the priority. Inflation is coming mainly from temporary and external price shocks - VAT, world commodity prices and the weak pound - not wage or consumer-driven increases. Increasing interest rates would do more harm than good."
Helen Dickinson, head of retail, KPMG, said:
“We have seen an emergence of new, lower spending patterns since the middle of January, which are currently continuing to trend downwards.
"Many retailers will not be able to sustain this ongoing weakness in demand beyond the short term and are hoping for some good news around the extended bank holiday period and a feel-good factor driven by the royal wedding.
"However, as disposable income continues to fall, without reducing saving or increasing borrowing – which would oppose current trends – this will not be possible.”