Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “UK retail sales data showed volumes slipped 0.4 per cent month on month in February, a smaller fall than expected, meaning activity has, for now at least, held onto much of its early year momentum.
“But those numbers predate the Middle East conflict, and weakening consumer confidence is likely the more telling signal, with the GfK reading dropping to an 11-month low in March as households grapple with the twin threat of higher inflation and softer growth prospects.
“Retail giant Next issued a strong set of full-year results yesterday, and despite the growing uncertainty on the back of the Middle East conflict, the group increased its UK sales growth expectations for the year ahead.
“Investors brave enough to dip their toes into the retail sector should focus on high-quality names like Next and Inditex, with higher margins and a proven track record of delivering cost savings to help offset any potential weakness in sales.
“Markets are currently pricing a nearly 90 per cent chance of a rate hike in April, but with sentiment already starting to wobble and growing risks to the growth outlook, a pause from the Bank of England could be the more measured prediction.”
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