Royal Wedding boosted sales, but not for long
Friday 20 May 2011
Economists urged "extreme caution" about reading too much into a strong rebound in retail sales last month, as chains were boosted by the hottest April on record, a glut of bank holidays and the Royal Wedding.
The Office for National Statistics said that sales volumes rose by 1.1 per cent last month, compared with the 1 cent rise forecast by economists and the 0.2 per cent rise seen in March.
The grocers benefited from shoppers spending on party food in the hot weather and ahead of the wedding on 29 April, while footwear and fashion chains enjoyed an early spike in customers purchasing summerwear.
While the figures provided a ray of hope to the sector, many chains expect to face tough trading for at least another year. Retailers including Dixons Retail, the owner of Currys and PC World, HMV, Mothercare and Thorntons have issued profit warnings recently. Many others have posted disappointing trading figures.
According to ONS, sales by value, including price rises, rose by 1.6 per cent between March and April. However, many economists said the figures provided little insight into the true state of consumer spending.
Barry Knight, head of retail at Grant Thornton UK, said: "Leaving aside the supermarkets which continue to trade satisfactorily, we are hearing from retailers on the ground across pretty much every single sub-sector that underlying trade is still weak. In many cases we are even starting to see online sales being affected due to weakening consumer demand." The buoyant ONS survey follows even perkier data from the British Retail Consortium, which reported that like-for-like retail sales rose by 5.2 per cent in April.
On the ONS figures, Nida Ali, the economic advisor to the Ernst & Young Item Club, said: "We would be extremely cautious about reading too much into these figures. Despite the upbeat April data, sales volumes rose by just 0.2 per cent in the three months to April."
Ms Ali said: "The broader picture of a weak consumer outlook remains unchanged. High inflation is eroding real incomes – evident particularly from this month's inflation and wage growth data – and the labour market remains weak. Moreover, highly indebted households are eager to pay down debt, and this combined with strict fiscal consolidation means that cautious consumers will be reluctant to loosen their purse strings. Indeed, UK retailers will have to be more resourceful than ever to secure a share of their wallets."
Compared with last year, ONS said that sales revenues rose by 2.8 per cent in April, while sales by value, including price rises, leapt by 6.2 per cent. Food shops were the star performers, growing sales volumes by 1.4 per cent – the first rise for 15 months – and by 6.1 per cent by value, as grocers pushed through price rises.
Among non-food chains, non-specialised stores enjoyed the biggest rise of 4.4 per cent in sales volumes. Textile, clothing and footwear stores also benefited from 2.2 per cent growth.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...