UK retail sales fall back in February ahead of Iran war impact

By David Milliken

LONDON, March 27 (Reuters) - ‌British retail ​sales fell ​in February after the strongest growth in a year and a half in January, official figures showed on Friday, ahead of ‌a likely hit in March as higher oil prices caused by ⁠the Iran war sap households' disposable income.

Retail sales volumes slipped by 0.4% on the month - a ‌smaller decline than the 0.7% ‌forecast in a Reuters poll of economists - after upwardly revised growth of 2.0% in January, the Office for National Statistics said.

January's monthly growth was the ​strongest since May 2024.

Annual sales growth slowed to 2.5% in February from 4.8% in January as unusually wet weather kept some shoppers at home, the ⁠ONS said, with monthly drops in purchases of automotive fuel, clothing, food and household goods.

British consumer sentiment ​has fallen since the start of the U.S.-Israeli strikes on Iran on February 28, which have pushed oil prices up by ​around 50%, though the extent of the ‌decline has varied between surveys.

"Retailers will now be facing into the spring season with growing trepidation. The conflict in the ⁠Middle East is likely to push up input and fuel costs for businesses and consumers alike," said Matt Jeffers, managing director for retail strategy in the United Kingdom and ⁠Ireland at consultants Accenture.

Earlier on Friday, Britain's longest-running consumer sentiment survey, from GfK, showed that ​morale had fallen to its lowest since April 2025, when households were hit by a wave of rises in utility bills.

Recent updates from major British retailers have generally been cautious ‌on the trading outlook, though department store group John Lewis, B&Q owner Kingfisher and clothing retailer Next all said ‌they had not yet seen an impact on UK sales from the Iran war.

Next ⁠did, however, warn that if war ‌disruption persisted beyond three ​months, it would need to offset higher operating costs by raising prices.

(Reporting by David Milliken; additional reporting by James DaveyEditing by ‌William Schomberg)

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