May 18 British shoppers set aside their concerns about fast-rising inflation following last year’s Brexit vote and unexpectedly stepped up spending at the fastest rate in years, helped by fine weather, official data showed, Reuters reports.
The figures suggest that – at least temporarily – consumers’ mood has become more upbeat in the run-up to a national election called for June 8 by Prime Minister Theresa May.
Retail sales volumes jumped by 2.3 percent on the month in April – beating economists’ average forecast of a 1.0 percent rise – after a sharp 1.4 percent fall in March that ended the weakest calendar quarter since 2010, the Office for National Statistics said on Thursday.
Looking at the value of retail spending – which adds in the extra amount shoppers spend because of higher inflation – sales in the three months to April were up 6.2 percent on a year earlier, the biggest rise in 15 years.
The robust retail sales data for April contrast with a generally downbeat tone so far this year, as a pick-up in inflation triggered by the fall in the pound after last year’s Brexit vote ate into households’ disposable income.
The ONS said it had anecdotal evidence from retailers that fine weather had boosted demand. An official said it was too soon to tell if inflation pressures would reassert themselves during the remainder of the quarter.
“We need a longer series to properly determine a pattern,” the official said.
Retail sales volumes were 4.0 percent higher than a year earlier after 2.0 percent annual growth in March, again beating forecasts in a Reuters poll for a 2.1 percent rise.
The ONS said the figures were seasonally adjusted to take account of the timing of Easter.
The strong retail sales tally with figures from the Confederation of British Industry, which said retailers reported rapid sales growth during the first part of April.
But British retailers have reported mixed fortunes. Earlier this month Next, Britain’s most successful clothing chain in recent years, lowered its annual profit forecast, counting the cost of tough trading conditions and self-inflicted problems with its product ranges.
Britons vote in three weeks’ time in an early national election May called in part to capitalise on unexpectedly strong economic growth in the months after last year’s Brexit vote.
But with inflation now at its highest since 2013 – partly as a result of sterling’s tumble following the Brexit vote – the Bank of England has warned that consumers will come under increasing pressure this year.
Official figures on Wednesday showed that average wages in Britain are now rising by less than inflation for the first time since 2014.
But May played down the role of the Brexit vote in pushing up inflation in a news conference on Wednesday, and instead focused on strong job creation in recent years and the record number of people now in work.
Consumer spending was the biggest driver of British growth after the Brexit vote. The BoE expects most of the shortfall in consumer demand this year to be offset by stronger exports and business investment, but many private-sector forecasters are more doubtful and see a bigger slowdown this year and next.