UK discretionary retail sales were broadly flat in March as a strong start to the month was offset by a sharp decline in spending following renewed Middle East tensions, according to the latest High Street Sales Tracker from accountancy and advisory firm BDO.

Total retail sales in discretionary categories — including fashion, homewares and lifestyle — rose by just 0.8% year on year, implying a fall in volumes once inflation is taken into account. The data point to weakening consumer demand as households face mounting cost pressures and deteriorating confidence.

March began with above-inflation growth across both in-store and online channels, with the first two weeks buoyed in part by Mother’s Day spending. However, sales momentum faltered in the third week of the month after the outbreak of conflict in the Middle East, before declining sharply. Sales fell by 3.04% in the fourth week and 7.74% in the fifth week compared with the same periods last year.

The downturn coincided with a drop in consumer confidence to its lowest level since April 2025, alongside warnings that food and fuel prices could rise further by the end of the year, increasing pressure on discretionary spending.

Sophie Michael, head of retail and wholesale at BDO, said March had offered “a ray of hope” after several difficult months, with early growth suggesting tentative recovery. However, she said the improvement proved short-lived as geopolitical tensions and rising costs weighed on sentiment.

Retailers now face a more challenging outlook heading into the spring trading period. Higher fuel, energy and food costs are adding to pressure on household budgets, while rising mortgage rates and council tax bills are further constraining spending. The sector is also contending with increases in the National Minimum Wage and expanded employment rights, which are expected to push up labour costs.

The combination of weakening demand and rising costs is likely to weigh on margins and investment decisions. Despite the approach of Easter and school holidays — typically a stronger period for discretionary spending — retailers are bracing for a difficult trading environment.

BDO said the confluence of falling consumer confidence, supply chain pressures and higher operating costs risked creating a “perfect storm” for the sector, with implications for sales growth and expansion plans over the coming months.