Treat retail spike with caution, warn experts

Strong retail figures for April provide a welcome boost for the sector after a dire March, but should be treated with a degree of caution, market experts have warned.

The Office of National Statistics (ONS) said today that retail sales grew 1.1% on a like-for-like basis and 2.8% annually during April.

Stephen Robertson, director general of the British Retail Consortium (BRC), said the data confirmed the trends seen in its own retail sales index, as the combination of sunshine, bank holidays and a later Easter than last year provided a much-needed boost for many retailers.

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But he cautioned: “Welcome though it is after a dire March, the improvement hasn’t reached all corners of retailing. Household goods sales were again down on a year ago as customers continue to feel they can’t stretch to buying pricier items such as furniture and large electricals. Consumer confidence is still falling.”

Nida Ali, economic advisor to the Ernst & Young ITEM Club, also warned against reading too much into the ONS numbers.

Alisaid the extreme seasonality of retail spending makes it really difficult for the ONS to properly adjust the data on a monthly basis, particularly when the Easter holidays move about.

“Even accounting for April’s warm weather and the extra bank holiday, monthly growth of 1.1% seems far from plausible and we would expect this to be followed by a sharp decline in the May figures,” said Ali. “However even taking these strong results at face value, sales volumes in the three months to April grew only 0.2%, which reinforces the underlying weakness in the retail sector.”

The BRC’s Robertson suggests that the performance of the market over the next few weeks will provide the real picture of how the retail sector is faring. “May’s growth is likely to be lower and a more realistic indication of how customers, retailers and the wider economy are progressing,” he said.

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