Warm welcome for big rebound in retail sales
RETAIL sales came in from the cold to enjoy their strongest growth for 18 months in April, but not before the “Beast from the East” had wrecked trading at DIY giant Kingfi sher.
Offi cial fi gures showed sales volumes rebounding by 1.6 per cent from March, when they were down by 1.1 per cent owing to the freeze. This was well above the 0.7 per cent gain expected by economists.
Petrol sales led the way with 4.7 per cent growth compared with a 6.9 per cent decline in March, when road closures affected travel. Excluding fuel, sales were up by 1.3 per cent as shoppers also bought more clothes, household goods and food, with only department stores in decline.
Goods bought in the three months to April rose 0.1 per cent after a fall of 0.4 per cent in the fi rst quarter. The Offi ce for National Statistics said the underlying position remained “subdued”.
Andrew Wishart, of Capital Economics, said conditions for a sustained recovery in consumer spending growth are in place, with healthy employment fi gures and real wages on the up. Retail sales make up nearly a fi fth of UK economic output.
But Dr Howard Archer, chief economic adviser to the EY ITEM Club, warned: “The recent rise in oil prices could lead infl ation to be higher than expected in the near term at least and could hold back the improvement in consumer purchasing power.”
He said the Bank of England would need to see “sustained conclusive evidence that the economy is bouncing back signifi cantly” from growth of just 0.1 per cent in the fi rst quarter before contemplating an interest rate hike.
Meanwhile, Kingfi sher’s samestore sales fell 4 per cent in the fi rst quarter. B& Q was down by 9 per cent, although Screwfi x sales grew by 3.6 per cent. CEO Veronique Laury said: “It was a challenging start to the year with exceptionally harsh weather across Europe and weak UK consumer demand.
“Market conditions continue to be mixed, with the UK uncertain.”