Retail sales up in April but analysts warn on implications of further rate hikes

Retail sales up in April but analysts warn on implications of further rate hikes

Retail gross sales volumes recovered barely by 0.5 per cent in April because the sector was lifted by the Easter holidays, nonetheless excessive inflation and strains on family funds proceed to hinder spending.

Non-food shops gross sales volumes rose by 1.0 per cent through the month, information from the ONS reveals, following a fall of 1.8 per cent in March, when a very wet begin to spring deterred buyers.

As grocery inflation stays at document highs of circa 17.1 per cent, meals shops gross sales volumes rose by 0.7 per cent in April 2023, following a fall of 0.8 per cent in March 2023.

Nonetheless volumes have been 2.7 per cent beneath their pre-coronavirus February 2020 ranges, as households proceed to spend cautiously when doing their weekly store.

Furthermore, on-line buying rose 0.2 per cent through the month, following a 1.4 per cent fall in March.

The figures present the impression of inflation, which is presently sat at 8.7 per cent, on Brits spending habits. When put next with their pre-coronavirus stage in February 2020, complete retail gross sales have been 16.5 per cent larger in worth phrases, however volumes have been 0.8 per cent decrease – because the nation will get much less for what they pay for.

Dee Corsi, chief government at New West Finish Firm, mentioned: “After a difficult few months, it’s optimistic to see that retail gross sales are up 0.5 per cent from final month.

“April spend was undoubtedly boosted by the Coronation weekend, seeing the arrival of 1000’s of worldwide vacationers. With inflation hitting home spending energy, the significance of worldwide guests has by no means been better.”

She added: “Nonetheless, as we glance in the direction of the historically busy Summer time buying and selling interval, we’re involved that the UK is heading in the right direction to overlook out on vital financial progress being seen in different European international locations which aren’t hamstrung by the vacationer tax. Figures right this moment additionally masks the probability of dropping out on future Chinese language spenders, who’re but to return in numbers.”

Evaluation by PwC recommended that the “optimistic momentum” was welcome however may very well be thrown off by rising rates of interest.

“General, the trajectory stays optimistic, with the perfect quarterly enchancment in retail gross sales volumes since August 2021. This echoes the newest measures of client sentiment, which has been bettering constantly since final Autumn,” a be aware circulated this morning mentioned.

“With this month’s gross sales prone to be helped by the Coronation and extra financial institution holidays, we count on the optimistic momentum to proceed within the brief time period. Nonetheless retailers might be hoping that the present inexperienced shoots are usually not dampened by larger rates of interest or different macroeconomic challenges over the summer season.”

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