Boom times on High Street as retail sales surge 10 per cent

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The Independent Online

Retail sales surged at their fastest rate since the building society demutualisation boom of 1996, figures from the high street's lobby group show.

Consumers flocked to shops in March, according to British Retail Consortium figures showing sales volumes were 10 per cent higher than a year ago.

The data are the latest to highlight the strength of the consumer boom and follow reports that house prices are rising at levels not seen since the 1980s. It also echoes government figures for February that showed the strongest growth since January 2000.

The BRC said the figures were flattered by the timing of Easter compared with last year, and the unseasonably warm weather, but said the overall picture was one of strength. "We have not seen the doom and gloom that was forecast after 11 September," said a spokesman. "March was a good strong month."

The BRC warned the Chancellor, Gordon Brown, not to use tomorrow's Budget to target the consumer. "It would disastrous for him to take too much demand out of the economy and threaten such a powerful driver of growth," it said.

Analysts believe the consumer boom has been fuelled by continued strong growth in wages, cheap loans, mortgage equity withdrawal and discounting on the high street.

The lack of pricing power was highlighted by separate figures showing manufacturers were forced to absorb almost all of last month's surge in the oil price, which rose at its fastest rate for two years.

The costs of goods bought by factories jumped 2.6 per cent in March, ahead of City forecasts. It was driven by a 15.8 per cent leap in oil products, the biggest jump since May 2000. But the prices charged rose just 0.1 per cent while on an annual basis prices have actually fallen by 0.2 per cent over the last year.

Even stripping out oil and other variables, input prices rose by 0.6 per cent, a 12-month high, while prices charged posted no increase at all.

"Producers remain unable to pass on higher costs to customers," said Ross Walker, a UK economist at Royal Bank of Scotland. "In the near term profit margins will continue to take the strain."