UK Retail Sales and Consumer Spend Lag Inflation in March but Clothing and Beauty Outperform

Why It Matters

The divergence between modest overall retail growth and strong performance in apparel and beauty signals shifting consumer priorities, offering retailers and investors insight into where demand is resilient amid inflationary pressure.

Key Takeaways

• Consumer card spending up 0.9% YoY in March, below 3.4% inflation
• Essential spend rose 0.5% after July 2025 dip
• Clothing sales jumped 3.6%, strongest since July 2025
• Health & beauty grew 6.3%, outpacing overall retail
• Non‑food online sales barely rose 0.1%, indicating offline strength

Pulse Analysis

UK consumer spending in March showed a mixed picture, with overall card‑based expenditures edging up 0.9% year‑on‑year, still trailing the 3.4% CPIH inflation gauge. Essential categories such as fuel‑related purchases nudged higher by 0.5%, marking the first post‑July 2025 increase, while discretionary spend slowed to a modest 1.1% and travel demand slipped 3.3% for the first time since early 2021. These figures suggest that while inflation is eroding real purchasing power, a core segment of households remains confident about meeting monthly budgets, as reflected by 71% reporting confidence in living within their means.

The standout performers were clothing and health‑and‑beauty, with sales climbing 3.6% and 6.3% respectively. The apparel gain represents the strongest quarterly rise since July 2025, likely buoyed by better weather prompting wardrobe updates and early‑season promotions. Health‑and‑beauty’s robust growth underscores a continued consumer focus on personal care, a trend accelerated by post‑pandemic hygiene habits. Retailers in these segments can leverage the momentum by expanding omnichannel offerings and targeted marketing, while specialist retailers outpaced generalists with a 5% increase, highlighting niche appeal.

Overall retail sales, according to the BRC‑KPMG report, rose 3.6% YoY, propelled largely by early‑Easter food spending. Non‑food sales grew only 0.9%, with in‑store figures modestly ahead of online at 1.4% versus a meager 0.1% online lift. This split suggests that brick‑and‑mortar locations still command consumer attention for non‑food items, offering opportunities for retailers to enhance in‑store experiences. For investors, the data points to resilient pockets within the UK retail landscape, where apparel and beauty can offset broader slowdown, making them attractive targets for strategic allocation.