In response to the latest retail sales data, Andrew Sentance, senior economic adviser at PwC, commented:
"These latest retail sales figures show that the post-Brexit surge in consumer spending has come to an abrupt end. Sales volumes in the first three months of this year were 1.4% down on the final quarter of 2016. This is the biggest quarterly drop recorded since early 2010 when the temporary reduction in VAT came to an end. It is the second biggest quarterly drop in retail sales recorded since the mid-1990s.
"It is not surprising to see consumers reining in their spending. Inflation has caught up with pay growth, so real incomes of workers are no longer rising. 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. That pattern of behaviour is not sustainable in the longer term and at some point consumers will start to rein in borrowing and rebuild their savings.
"For all these reasons, we should see these retail sales figures as the start of a period of much weaker consumer spending growth - which will act as a drag on the overall progress of the UK economy over this year and next.
"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."
Craig Skelton, retail partner at PwC, said:
"Retailers may be disappointed with the March results, however, it should be noted that the numbers will have been impacted by the timing of the Easter holidays, as well as other factors facing the retail industry at the moment, such as increased input costs.
"Mother's Day will have given some retailers a boost, particularly in the beauty sector. Grocery sales continue to outperform non-grocery as consumers focus on essential items. Price pressures are starting to bear down on household disposable income.
"Retailers will hope that the good weather over the Easter holiday period translates to the checkout tills in retail sales. Garden and home improvements should have a better month, however, April will also see retailers grappling with factors such as the change to business rates - putting further pressure on margins."
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2017 PwC. All rights reserved