Surprise fall in high street spending

AN UNEXPECTED fall in high street spending last month fuelled hopes of a cut in interest rates yesterday.

Retail sales fell 0.5 per cent in April leaving a growth of 1.6 per cent compared with a year ago, according to official figures.

The City had expected no monthly growth and an annual rise of 2.3 per cent, and shares rose on hopes of a loosening of monetary policy. But many analysts focused on a strong rise in spending on household goods - the catalyst of the last consumer boom - and a survey showing a surge in consumer confidence.

The surprise slump was attributed to a fall in food sales, which dipped by 0.1 per cent in the three months to April, compared with the previous quarter.

Compared with a year ago, food sales rose by just 0.2 per cent, the lowest figure since modern records began in 1987.

But the Office for National Statistics, which compiled the figures, said the underlying trend was positive. The three-month rate, which irons out monthly blips, showed a rise of 1.8 per cent - the second consecutive increase. On the same basis, household goods sales rose 5.6 per cent on the back of a monthly gain of 1.7 per cent.

A European Commission survey found consumer confidence was back at the levels recorded in May 1998. The GfK index of consumers' readiness to make a major household purchase rose to a new high.

Neil Parker of Royal Bank of Scotland,said: "Pockets of activity remain, especially in the household goods sector. The Bank of England would be making a mistake if it cut interest rates again given the turnaround in consumer confidence."

Analysts said the data was difficult to read as it included Easter and the impact of the nail bombs in central London. Glenn Davies of Credit Lyonnais said: "The timing did create problems and it's not clear the statisticians did adjust properly for that. We are seeing a pick up, and it's more important to look at the three-month and six-month moving averages."

But Jeremy Hawkins of Bank of America said: "The retail sales data are at the weak end of expectations and fly in the face of the improvement in consumer confidence. This may not be enough to force the Bank's hand next month but prospects for more rate cuts medium-term are looking increasingly bright."

The British Retail Consortium, whose own survey recorded its first ever fall in sales in April, said the ONS data confirmed retailers' fears. "It is really saying much the same thing that we said earlier this month, that there is not a lot of demand out there. I would not say these figures are encouraging," said economist Pamela Webber.

Meanwhile, retail property is expected to see an acceleration in rental growth in the second half of the year according to a report by Donaldsons, the property agency.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Frank Turner performing at 93 Feet East
musicReview: 93 Feet East, London
News
Toronto tops the charts across a range of indexes
news

World cities ranked in terms of safety, food security and 'liveability'

Extras
indybest
Voices
A mother and her child
voices
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee