The figures for April UK retail sales published today by the Office for National Statistics provide a welcome boost after the disappointment of the first quarter estimates published last month. That figure fell 1.4%, the biggest quarterly drop since 2010.
Six main points identified by the ONS
- In April 2017, the quantity bought in the retail industry increased by 2.3% compared with March 2017 and by 4.0% compared with April 2016
- The underlying pattern, as measured by the three-month on three-month estimate, showed a slight increase in April 2017 following a short period of contraction, increasing by 0.3%
- Anecdotal evidence from retailers suggests that good weather contributed to growth
- Average prices slowed slightly in April 2017, falling from 3.3% in March to 3.1% in April
- Internet sales rose 19% year-on-year, accounting for 15.6% of total sales
- Average weekly spending online was £1bn
How the RSI works
The Retail Sales Index (RSI) measures the value and volume of retail sales in Great Britain on a monthly basis. Data are collected from businesses in the retail industry.
The survey’s results are used to produce seasonally adjusted monthly, quarterly and annual estimates of output in the retail industry at current price and at chained volume measures (removing the effect of inflation).
Balance tilts in favour of sterling
The statistics have as a side-effect provided some good news for those who have felt that sterling's fall from grace after the vote to leave the European Union has been overdone.
The pound has gone through the psychologically significant $1.30 mark for the first time since September, notes David Lamb. He is head of dealing at FEXCO Corporate Payments, an international payments business based in Ireland.
The combination of the UK’s surging consumer spending and president Trump’s firestorm has decisively tilted the balance of power in favour of the pound over the dollar, Lamb observes.
“Britain’s wage squeeze may have scotched any slim hope of the Bank of England raising rates this year, but the UK economy continues to create jobs at a prodigious rate and its retail boom is still in full swing.
“For now the markets – and the Bank – seem to have accepted short-term inflation as the new normal, and are instead focusing on the economy’s underlying momentum,” he adds. “This confidence has sent the pound rocketing not just against the dollar but the euro too.”
Tough times for retail
Michael Baxter, economics commentator at UK retail stockbroker The Share Centre said: “April data seemed to reverse a worrying trend – but it is worth remembering that particularly good weather for the time of year may have distorted the performance.
“It is clear that these are tough times for retail, particularly for those businesses who do not implement a plan to make maximum use of emerging technologies. In the years ahead, successful retailers will be the ones that embrace technology most effectively.”