Cost-of-living crisis concern despite rise in retail sales
BRITISH retail sales unexpectedly rebounded in April, data showed last Friday (20), but remain on a longterm downward trend amid a costof-living crisis that saw inflation rocket to a 40-year high.
Total sales volumes jumped 1.4 per cent last month after a 1.2 per cent drop in March, the Office for National Statistics (ONS) said in a statement.
However, sales fell 0.3 per cent in the three months to April compared the previous three months, extending a downward trend in place since summer 2021 according to the ONS.
“Retail sales picked up in April after last month’s fall,” said Heather Bovill, the ONS deputy director for surveys and economic indicators.
“However, these figures still show a continued longer-term downward trend,” she added.
“April’s rise was driven by an increase in supermarket sales, led by alcohol and tobacco and sweet treats, with off-licences also reporting a boost, possibly due to people staying in more to save money.”
Inflation rocketed in April to nine per cent, the highest since 1982, driven largely by soaring domestic energy prices.
The squeeze on UK household budgets tightened further in April after a tax hike as the government looks to improve state coffers battered by Covid support.
“The unexpectedly strong rise in retail sales in April suggests that the cost of living crisis has not caused consumer spending to collapse, and means that the economy may have a little more momentum than we thought,” noted Capital Economics analyst Nicholas Farr.
However, Pantheon Macroeconomics analyst Samuel Tombs cautioned that the worst was perhaps yet to come. “The impact of April’s increase in both (taxation) and energy bills has not fully emerged in the retail sales data yet, because most people only get paid towards the end of the month, and bills will be paid progressively through the month,” noted Tombs. “It won’t be until May’s data that we can assess how much of the resulting squeeze on households’ real disposable incomes has fed through to spending.”