Retail sales up in April but analysts warn on implications of further rate hikes
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Retail sales volumes recovered slightly by 0.5 per cent in April as the sector was lifted by the Easter holidays, however high inflation and strains on household finances continue to hinder spending.
Non-food stores sales volumes rose by 1.0 per cent during the month, data from the ONS shows, following a fall of 1.8 per cent in March, when a particularly rainy start to spring deterred shoppers.
As grocery inflation remains at record highs of circa 17.1 per cent, food stores sales volumes rose by 0.7 per cent in April 2023, following a fall of 0.8 per cent in March 2023.
However volumes were 2.7 per cent below their pre-coronavirus February 2020 levels, as households continue to spend cautiously when doing their weekly shop.
Moreover, online shopping rose 0.2 per cent during the month, following a 1.4 per cent fall in March.
The figures show the impact of inflation, which is currently sat at 8.7 per cent, on Brits spending habits. When compared with their pre-coronavirus level in February 2020, total retail sales were 16.5 per cent higher in value terms, but volumes were 0.8 per cent lower – as the nation gets less for what they pay for.
Dee Corsi, chief executive at New West End Company, said: “After a challenging few months, it is positive to see that retail sales are up 0.5 per cent from last month.
“April spend was undoubtedly boosted by the Coronation weekend, seeing the arrival of thousands of international tourists. With inflation hitting domestic spending power, the importance of international visitors has never been greater.”
She added: “However, as we look towards the traditionally busy Summer trading period, we are concerned that the UK is on course to miss out on critical economic growth being seen in other European countries which aren’t hamstrung by the tourist tax. Figures today also mask the likelihood of losing out on future Chinese spenders, who are yet to return in numbers.”
Analysis by PwC suggested that the “positive momentum” was welcome but could be thrown off by rising interest rates.
“Overall, the trajectory remains positive, with the best quarterly improvement in retail sales volumes since August 2021. This echoes the latest measures of consumer sentiment, which has been improving continuously since last Autumn,” a note circulated this morning said.
“With this month’s sales likely to be helped by the Coronation and additional bank holidays, we expect the positive momentum to continue in the short term. However retailers will be hoping that the current green shoots are not dampened by higher interest rates or other macroeconomic challenges over the summer.”