UK Retail Sales Plunge as Iran War Leads to Fewer Car Trips

Shoppers in Chelmsford, UK. Photo by Chris Ratcliffe /Bloomberg

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(Bloomberg) — UK retail sales fell at the fastest pace in nearly a year as consumers pulled back spending and made fewer car journeys amid the global energy shock from war in Iran.

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The Office for National Statistics said the volume of goods sold online and in stores fell 1.3%, after rising a revised 0.6% the previous month when households stocked up on fuel. It was the sharpest drop since May 2025, and worse than the 0.6% decline expected by economists.

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“After strong growth last month, motor fuel sales fell in April, with evidence suggesting motorists were conserving fuel after stocking up in March,” ONS Chief Economist Grant Fitzner said. “These subdued fuel purchases contributed to a sizeable monthly fall for total retail sales in April.”

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Motor fuel sales were down 10%, the largest monthly fall since November 2020 during the Covid pandemic. The decline reflected drivers filling up their cars and taking fewer trips, which in turn may have led to lower sales in shops. Retail sales excluding autofuel declined 0.4% on the month, down across all categories apart from food.

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Clothing stores recorded their worst performance since June last year, with retailers citing weak sentiment and variable weather.

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Consumers account for around 60% of economic activity in the UK, with the Labour government keen to ease cost-of-living pressures and keep people spending. On Thursday, Chancellor of the Exchequer Rachel Reeves announced a support package that included VAT cuts on British summer attractions, in a bid to lift sentiment during a summer likely to be overshadowed by the effects of global unrest.

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Friday’s ONS data adds to evidence that the US-Israeli war in Iran is hitting the UK’s growth prospects. Consumers were reluctant to spend their recent pay gains even before the conflict erupted. Now the prospect of accelerating inflation and a weakening labor market are likely to reinforce a cautious mood among households.

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GfK’s consumer confidence report, published earlier on Friday, showed savings intentions plunging the most since 2024. It suggested families are drawing down their savings and shunning big purchases to pay for essentials.

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For now, however, the effects of the Middle East conflict for UK households remain largely limited to higher prices at the pump. Inflation came in softer-than-expected in April thanks to more favorable annual comparisons and government support for bills. 

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Still, the war’s impact is likely to become more pronounced in the coming weeks. The UK’s cap on household energy bills will jump 13% this summer to reflect higher wholesale gas and power costs.

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“Consumers have begun tightening their purse strings in response to rocketing motor fuel prices and uncertainty triggered by the Iran War,” Rob Wood, chief UK economist at Pantheon, said. He added that the report suggests GDP growth slowed sharply to just 0.1% in the second quarter.