UK Retail Rebound in March as Geopolitics Loom Over Inflation Outlook

UK retail sales in March 2026 rose 0.7% month-on-month, beating expectations of 0.2% and bouncing back from February’s revised -0.6% drop, according to ONS data released April 24. Excluding fuel, the gain was milder at 0.2%, led by clothing, telecoms, and non-store (online) sales amid warmer weather. The surge reflects a mix of improved weather-driven shopping and volatility in energy-related spending as consumers respond to price signals from global tensions.

On an annual basis, March sales grew 1.7%, underscoring resilience even as forecasts loomed below 2%. Quarter-by-quarter performance remains positive, though sentiment signals suggest slowing momentum ahead, with the CBI surveys pointing to a -49% contraction expected for April amid weak demand. This juxtaposition of solid near-term spending with softer forward-looking indicators highlights a consumer backdrop that supports the case for cautious BoE easing, even as oil-price volatility adds a layer of inflation risk.

Looking ahead, the data imply that domestic demand stayed robust enough to offset some external headwinds from geopolitical tensions like the Hormuz disruptions. The mix of stronger clothing and non-store sales with softer food-outlet performance suggests uneven momentum across sectors. Markets will be watching how sustained this rebound is, given ongoing energy-market volatility and the potential for renewed inflation pressures to shape the Bank of England’s policy stance.