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UK retail sales unexpectedly jump in April

By Michele Maatouk

Date: Friday 20 May 2022

UK retail sales unexpectedly jump in April

(Sharecast News) - UK retail sales unexpectedly rose in April, underpinned in part by an increase in food store sales, according to figures released on Friday by the Office for National Statistics.
Retail sales were up 1.4% following a 1.2% decline March, and versus expectations for a 0.2% drop. Compared with pre-Covid February 2020 levels, retail sales were ahead 4.1%.

Food store sales were up 2.8%, mostly due to higher spending on alcohol and tobacco in supermarkets, the ONS said. Meanwhile, fuel sales rose 1.4% on the month and sales at non-food stores were 0.6% lower.

ONS deputy director for surveys and economic indicators, Heather Bovill, said: "April's rise was driven by an increase in supermarket sales, led by alcohol and tobacco and sweet treats, with off-licences also reporting a boost, possibly due to people staying in more to save money."

In the three months to April, retail sales were down 0.3% following a 0.7% decline in March.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The impact of April's increase in both National Insurance contributions and energy bills hasn't fully emerged in the retail sales data yet, because most people only get paid towards the end of the month, and bills will be paid progressively through the month.

"It won't be until May's data that we can assess how much of the resulting squeeze on households' real disposable incomes has fed through to spending."

He said the rise in food store sales "suggests that people are responding to the real income squeeze by spending less in pubs and bars".

Danni Hewson, financial analyst at AJ Bell, said: "The unexpected upturn in retail sales could be viewed as a positive sign that the consumer isn't as bruised as other data suggests. But digging into April's figures the big uptick in food and drink spend in supermarkets might indicate that people are choosing their kitchen tables over pubs and restaurants as they look to save money.

"Whilst food spend has been largely unchanged, which suggests people are still being cautious, spend on alcohol and tobacco has soared. Life's little luxuries, the things that help us get by when times are tough, will have to come in under budget as those budgets are tested."

A survey from GfK also released on Friday showed that UK consumer confidence fell to its lowest level in May since records began in 1974 amid the cost-of-living crisis. GfK's consumer confidence index fell 2 percentage points to -40.

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