UK retail sales grew more than expected in April

British retail sales grew more than expected in April, rebounding after bad weather hit spending in March and helped by increased government benefits.

The quantity of goods bought in Britain rose 0.5 per cent between March and April, in part reversing the sharp contraction in the previous month, according to data published on Friday by the Office for National Statistics.

This was higher than the 0.3 per cent growth forecast by economists polled by Reuters, but the March rate was revised to a 1.2 per cent fall from a 0.9 per cent contraction of initial estimates.

Sales volumes rose 0.8 per cent in the three months to April when compared with the previous three months, the highest rate since August 2021.

Grant Fitzner, ONS chief economist, said: “Retail sales grew, partially rebounding from a poor weather-affected March, with jewellers, sports retailers and department stores all having a good month.”

He added that, despite continued high food prices, supermarkets also recovered.

Department stores’ sales volumes rose 1.7 per cent in April following a fall of 3 per cent in the previous month. Food stores’ sales volumes edged up 0.7 per cent, after dropping in March, but remained 2.7 per cent below their pre-coronavirus February 2020 levels.

Meanwhile, automotive fuel stores’ sales volumes fell 2.2 per cent in April, following a small rise in the previous month, which the ONS partially attributed to industrial action affecting public transport in March.

Ashley Webb, UK economist at Capital Economics, said that while some of the expansion in sales could have been due to a rebound from the more seasonable weather in April, the boost to household incomes from the larger-than-usual rises in the state pension, welfare payments and minimum wage in early April probably “played a part too”.

In April, government benefits payments for millions of households increased in line with the 10.1 per cent inflation rate of September 2022, supporting household finances.

Martin Beck, chief economic adviser to the EY Item Club, said that April’s retail performance “tallies with an improving outlook for consumer spending”, with the jobs market proving resilient and consumer sentiment starting to recover.

Retail sales volumes were down 3 per cent compared with April last year, even if shoppers spent 4.7 per cent more, laying bare the impact of sticky high inflation on households’ finances. 

UK inflation fell less than expected to 8.7 per cent in April, with food inflation remaining close to its 45-year high at 19.1 per cent. That has raised market expectations for further interest rate increases, which means higher mortgage payments for millions of households.

Aled Patchett, head of retail and consumer goods at Lloyds Bank, said that despite challenges persisting, “retailers will hope three bank holidays, warmer weather and recovering confidence could be the tailwind they need to boost sales in May”.

With falling energy costs and easing inflation, the recovery should extend throughout the quarter, according to Gabriella Dickens, economist at Pantheon Macroeconomics. “Retail sales should continue to pick up in Q3, as real disposable incomes begin to recover.”

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