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UK retail sales recover from snow, underlying conditions remain weak
Retail sales volumes rose much more than expected in April as the industry recovered well from the weather-induced slump the month before.
Retail sales in April climbed 1.6% month-on-month and 1.4% on the year, the Office for National Statistics revealed. This was well above the consensus forecast of 0.9% for monthly growth and 0.2% for the year.
Non-food sales rose 1.5% on the month while food sales were up 1.4%. Petrol sales rebounded 4.7% month-on-month in April after diving 6.9% a month earlier when drivers were more homebound due to the snow.
Increases were seen across all sectors in April, except department stores, the ONS said, with department stores declining following relatively strong sales last month, when their online sales were boosted during the adverse weather.
The high street's underlying performance over recent months remained subdued, with volumes up just 0.1% in the three months to April, compared to the three months to January.
Shop price inflation clambered back up to 2.2% in April due to higher oil prices, having fallen to a 14-month low of 1.9% in March from 2.5% in February and a peak of 3.3% last September. Shop price inflation excluding fuel was stable at 2.0% in April, the lowest since April last year.
Retail sales bounced back in April as petrol and other sales recovered from the snowfall, said Rob Kent-Smith, ONS head of national accounts. "But the underlying position remains subdued with the volume of goods sold over the last six months broadly unchanged... Over the longer-term retail sales growth has slowed considerably, with increases in food, household goods and internet retailers being largely offset by declines across all other types of retailing."
The rise only reflects recovery from snow-induced weakness in March, rather than robust underlying momentum in spending, agreed economist Sam Tombs at Pantheon Macroeconomics.
"Volumes in April only matched their November peak, and the underlying trend still looks flat. Growth was strongest in weather-sensitive sectors," he said, pointing to clothing sales volumes, sporting equipment and gardening products.
Nevertheless, this was some "much-needed, better than expected news for the UK economy" said Howard Archer, chief economic advisor to the EY ITEM Club. "After a stream of recent disappointing data and surveys, the April retail sales data provide some hope that the economy may be coming back to life after its marked first-quarter downturn which seems to have been only partly due to the severe weather."
However, while retail sales rose month-on-month, Archer agreed that it was premature to celebrate the return of the consumer, with the underlying three-month performance still weak. "Consumers still appear to be cautious; they have faced an extended squeeze on their purchasing power, while their confidence has been fragile as it is has been pressurised by economic and Brexit uncertainties. The main support to consumer spending has come from high employment which reached a new record high in the three months to March."
He added that the recent rise in oil prices to a three-and-a-half year high could lead inflation to be higher than expected in the near term at least and hold back the improvement in consumer purchasing power. "At the very least, current higher fuel prices will mean that consumers will have less to spend on discretionary items."
Retail sales in April climbed 1.6% month-on-month and 1.4% on the year, the Office for National Statistics revealed. This was well above the consensus forecast of 0.9% for monthly growth and 0.2% for the year.
Non-food sales rose 1.5% on the month while food sales were up 1.4%. Petrol sales rebounded 4.7% month-on-month in April after diving 6.9% a month earlier when drivers were more homebound due to the snow.
Increases were seen across all sectors in April, except department stores, the ONS said, with department stores declining following relatively strong sales last month, when their online sales were boosted during the adverse weather.
The high street's underlying performance over recent months remained subdued, with volumes up just 0.1% in the three months to April, compared to the three months to January.
Shop price inflation clambered back up to 2.2% in April due to higher oil prices, having fallen to a 14-month low of 1.9% in March from 2.5% in February and a peak of 3.3% last September. Shop price inflation excluding fuel was stable at 2.0% in April, the lowest since April last year.
Retail sales bounced back in April as petrol and other sales recovered from the snowfall, said Rob Kent-Smith, ONS head of national accounts. "But the underlying position remains subdued with the volume of goods sold over the last six months broadly unchanged... Over the longer-term retail sales growth has slowed considerably, with increases in food, household goods and internet retailers being largely offset by declines across all other types of retailing."
The rise only reflects recovery from snow-induced weakness in March, rather than robust underlying momentum in spending, agreed economist Sam Tombs at Pantheon Macroeconomics.
"Volumes in April only matched their November peak, and the underlying trend still looks flat. Growth was strongest in weather-sensitive sectors," he said, pointing to clothing sales volumes, sporting equipment and gardening products.
Nevertheless, this was some "much-needed, better than expected news for the UK economy" said Howard Archer, chief economic advisor to the EY ITEM Club. "After a stream of recent disappointing data and surveys, the April retail sales data provide some hope that the economy may be coming back to life after its marked first-quarter downturn which seems to have been only partly due to the severe weather."
However, while retail sales rose month-on-month, Archer agreed that it was premature to celebrate the return of the consumer, with the underlying three-month performance still weak. "Consumers still appear to be cautious; they have faced an extended squeeze on their purchasing power, while their confidence has been fragile as it is has been pressurised by economic and Brexit uncertainties. The main support to consumer spending has come from high employment which reached a new record high in the three months to March."
He added that the recent rise in oil prices to a three-and-a-half year high could lead inflation to be higher than expected in the near term at least and hold back the improvement in consumer purchasing power. "At the very least, current higher fuel prices will mean that consumers will have less to spend on discretionary items."
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