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  1. ITV Report

Rising prices blamed for biggest drop in sales for seven years

Higher prices in shops appear to have persuaded people to curb their post-Brexit spending. Credit: PA

Rising living costs have been blamed for a sharp decline in retail sales in 2017 which mark a blunt end to the unexpected post-Brexit surge in consumer spending.

Shoppers had defied expectations after last year's EU vote through the rest of 2016 but appear to have finally curbed spending amid notable price rises.

The pound's slump since the Brexit vote meant manufacturers passed on soaring costs to consumers and imported goods became more expensive.

  • How big was the sales decline?

The retail sales decline of 1.4% from January to March was the biggest fall for seven years over the three-month period.

The 1.8% decline on the month to March was also well below expectations.

The Office for National Statistics (ONS), which released the figures, said the drop is expected to trim 0.1 percentage points off UK economic growth in the first quarter of 2017.

Average store prices jumped 3.3% on the year - their biggest rise since March 2012 - while average petrol prices rocketed by 16.4%.

  • How are the figures being interpreted?

ITV New Business Editor Joel Hills noted the impact of the price rises on household spending as the key trend.

He pointed to Resolution Foundation economist Matt Wittaker's sharing of an ONS graphic which showed the latest figures form part of the biggest back-to-back drop in retail sales since 2010.

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  • What do the figures suggest for the future of the economy?

With inflation remaining higher than the Bank of England's target (2.3% rather than 2%) the decline points to the start of the UK's economic slowdown, experts have said.

"Inflation has caught up with pay growth, so real incomes of workers are no longer rising," PwC's senior economic adviser Andrew Sentance said.

Does the interpreted drop in household spending signal a gloomy future for the economy? Credit: PA

"Employment growth has also slowed sharply over the past six months, even though unemployment remains historically low.

"The recent period of strong consumer spending growth also relied on households running down their saving and increasing borrowing.

"This is the clearest indication yet that the expected slowdown in the UK economy has begun, and we should expect to see this confirmed in other economic data over the next few months."

  • How are the rising prices but declining sales impacting on shops?

The tough trading conditions appear to be having a big impact on leading retailers.

Debenhams were the latest big name to announce plans to close 11 warehouses and put up to 10 stores under review, while Marks & Spencer also said it would close six stores.

Hundreds of Debenhams jobs are at risk in the firm's store and warehouse overhaul. Credit: PA