Official figures that demonstrated modest damage from the spike in inflation showed that British consumers increased the pace of their spending last month and that sales volumes during the three months to April increased by the most since mid-2021.
The Office for National Statistics said on Friday that sales volumes increased by a little stronger-than-expected 0.5% in April compared to March, when they declined by 1.2% as exceptionally heavy weather kept consumers at home.
As welfare benefits increased for many lower-income households in April, economists surveyed by Reuters had predicted a 0.3% increase.
Sales increased by 0.8% from the previous three months from February to April, the highest growth since the three months ending in August 2021.
“April saw a surprising uplift in retail sales despite ongoing inflationary pressures,” Oliver Vernon-Harcourt, head of retail at Deloitte, said.
“The economic environment remains incredibly tough for many, but consumer confidence is slowly improving from record lows seen in the past year.”
Following the release of the figures, sterling appreciated against the dollar and the euro.
Rising earnings, according to Emma Mogford, a fund manager with Premier Miton Monthly Income Fund, are somewhat countering the cost-of-living constraint. But later in the year, she added, “any increase in unemployment could dampen confidence once more.”
Data released earlier this week revealed that although inflation fell to 8.7% in April from 10.1% in March, that decrease was smaller than anticipated and indicators of underlying inflation increased.
Andrew Bailey, governor of the Bank of England, stated on Wednesday that inflation may end up being “sticky and stubborn.”
The data released on Friday served as a reminder of how the rising cost of living is impacting household spending.
Retail sales volumes in April decreased 3.0% from the same month last year. The annual decline in food sales was 2.7%, although it was the second-smallest decline since the end of 2021.
The possibility of additional BoE rate hikes will hurt the finances of many people with fixed-rate mortgage contracts who have not yet been harmed by the rise in borrowing rates, according to Martin Beck, chief economist for forecasters EY ITEM Club.
“On that score, 2.5 million households face a rise in mortgage interest payments during 2023,” he said.
Jewellers, sports merchants, and department stores all had a successful month in April, according to ONS Chief Economist Grant Fitzner.
For the first time this year, JD Sports Fashion anticipates its underlying profit to surpass 1 billion pounds ($1.26 billion), as young consumers increased their purchases of hoodies, trainers, and joggers. One of the most well-known stores in Britain, Marks & Spencer, predicted modest revenue increase this week.
“Despite continued high food prices, supermarkets also recovered from the fall in March. However, these were partly offset by a drop in the amount of fuel sold, despite prices also dropping,” Fitzner said.
Food sales increased by 0.7% on a monthly basis after declining by 0.8% in March.
An ONS official noted that retailers had reported indications that the wave of public sector worker strikes in April contributed to the 2.2% decline in fuel sales volumes for the month.
(Adapted from USNews.com)
Categories: Economy & Finance, Geopolitics, Strategy, Sustainability, Uncategorized
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