UK Retail Sales Rebound As Weather Improves

UK Retail Sales Rebound As Weather Improves

June 2, 2023

UK retail sales rebounded at a stronger-than-expected pace in April after poor weather conditions dampened sales in March, official data revealed Friday.

The retail sales volume increased 0.5 percent month-on-month, in contrast to the revised 1.2 percent fall in March, the Office for National Statistics reported. Sales were forecast to grow more moderately by 0.3 percent.

Non-food stores sales advanced 1.0 percent, following a 1.8 percent fall in March, when poor weather conditions throughout most of March affected sales. Likewise, food store sales grew 0.7 percent after a 0.8 percent drop in March.

Despite falling fuel prices, automotive fuel sales decreased 2.2 percent, following a 0.1 percent rise. The decline auto fuel partly reflects industrial action affecting public transport in March.

The bigger-than-usual increases in the state pension, welfare payments as well as minimum wages helped to lift household incomes in April, Capital Economics’ economist Ashley Webb said.

Although the worst of the declines in retail sales volumes are in the past, higher interest rates are still likely to lead to a fall in real consumer spending later this year, Webb added.

ING Economist James Smith said the year-long retail recession seen in 2022 looks to be over. With real wage growth set to become less negative, the worst is probably behind us for the sector, the economist added.

Excluding auto fuel, retail sales advanced 0.8 percent, reversing March’s 1.4 percent decrease. Economists had forecast the volume to climb only 0.3 percent.

On a yearly basis, retail sales dropped at a slower pace of 3.0 percent, in line with expectations, after a 3.9 percent decrease in March. Excluding auto fuel, the decline in retail sales eased to 2.6 percent from 4.0 percent.

In three months to April, retail sales volumes advanced 0.8 percent, the strongest since August 2021.

Retailers expect sales to stabilize in June after a decline in May, the latest Distributive Trades Survey from the Confederation of British Industry revealed on Thursday.

The CBI survey showed a notable fall in headcount in the retail sector and also a sharp deterioration in investment intentions. Moreover, retailers said price growth remained near multi-decade highs.

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