UK retail sales grew more than expected in April

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

The quantity of goods purchased in Britain rose by 0.5% between March and April, partly reversing the previous month’s sharp contraction, according to data released on Friday by the Office for National Statistics.

This was higher than the 0.3% growth forecast by economists polled by Reuters, but the March rate was revised to a 1.2% decline from a 0.9% contraction in initial estimates.

Sales volumes increased 0.8% in the three months to April compared to the previous three months, the highest rate since August 2021.

Grant Fitzner, chief economist at ONS, said: “Retail sales rose, partly recovering from a March marked by unfavorable weather, with jewellers, sporting goods retailers and department stores all having a good month.” .

He added that despite continued high food pricessupermarkets have also recovered.

Department store sales volumes increased 1.7% in April after a 3% decline in the previous month. Grocery store sales volumes increased 0.7% after a decline in March but remained 2.7% below pre-coronavirus levels in February 2020.

Meanwhile, sales volumes at motor fuel stores fell 2.2% in April, after a small increase in the previous month, which the ONS partially attributed to union action that hit public transport in March .

Ashley Webb, UK economist at Capital Economics, said while some of the sales expansion may have been due to a rebound from April’s more seasonal weather, rising household incomes from larger-than-usual increases in the state pension, welfare payments and the minimum wage in early April probably “played a role too”.

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

Martin Beck, chief economic adviser to the EY Item Club, said April’s retail performance “matches an improving outlook for consumer spending,” with the labor market that proves to be resilient and consumer sentiment begins to recover.

Retail sales volumes were down 3% from April last year, even as shoppers spent 4.7% more, exposing the impact of high and sticky inflation on household finances.

Inflation in the UK fell less than expected to 8.7% in April, with food inflation remaining close to its 45-year high at 19.1%. This has raised market expectations for further interest rate hikes, meaning higher mortgage payments for millions of households.

Aled Patchett, head of retail and consumer goods at Lloyds Bank, said that while challenges persist, ‘retailers are hoping three bank holidays, warmer weather and a recovery in confidence could be the tailwind. they need to boost sales in May.”

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