The UK retail sector defied low expectations and also low pressure on the weather front to record impressive sales in April, according to data compiled by the British Retail Consortium (BRC) and accountants KPMG.
Data from the April BRC-KPMG Retail Sales Monitor revealed that retail sales were up 5.1 per cent by value on the same year in 2022, matching the growth seen in March.
While this is good news on the face of it, the news comes with caveats, most importantly, that the increased value was largely absorbed by inflation and the actual volume of sales, of both food and non-food goods, was down.
Moreover, with inflation persisting and the Bank of England raising the base rate again to 4.5 per cent, the squeeze on consumers remains; this means shop maintenance should not be neglected as retailers need to ensure their premises are attractive places for consumers to enter, browse and spend in while money is tight.
UK head of retail at KPMG Paul Martin observed: “Consumer demand has so far been fairly resilient to the twin drags of high inflation and high interest rates.”
However, he added, with government help for energy bills and other costs set to end, continued health retail sales will be dependent on inflation easing.
In the minutes of the Bank of England’s Monetary Policy Committee following the base rate decision, it was noted that the latest rate rise may not be the last, although it did say it expects the Consumer Prices Index rate of inflation to drop markedly from April, as the effects of the inflationary shock caused by the war in Ukraine a year ago drop out of the annual calculation.
What that will not do, however, is take away the impact those price rises had on consumer spending power. While recent comments by the Bank’s head economist Huw Pill that consumers should accept they were worse off has earned a rebuke from the bank’s governor Andrew Bailey, this was for its tone, not its factual accuracy.
Mr Bailey noted that those on lower incomes have taken a particular hit as much more of their spending goes on essentials like energy and food, which have seen the largest price increases.