Helen Nugent

The sun shines on retail sales

The sun shines on retail sales
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When the sun shineth...go shopping. That's what we did in our droves during April, boosting retail sales by 4 per cent compared to the same month last year.

According to the Office for National Statistics (ONS), anecdotal evidence from retailers suggests that good weather contributed to growth in sales, which increased by 2.3 per cent in the three months to April compared to a 1.4 per cent decline in the first quarter. And there's the fact that Easter also fell in April this year, prompting sales of furniture, golf equipment and motorbike accessories.

Analysts were cheered by the data, which was beyond their expectations, but said the real test lies ahead.

Michael Baxter, economics commentator at The Share Centre said: 'It is worth remembering that particularly good weather for the time of year may have distorted the performance. Developments in the labour market, meanwhile, are having a contradictory effect. On the one hand, UK unemployment is down to its lowest level since 1975, but despite this employment is still rising strongly. On the other hand, average real wages are either falling or rising very slowly depending on which measure you use. With bonuses, they rose by 0.1 per cent in the three months to March, without bonuses they fell by 0.2 per cent.

'Inflation is expected to rise over the next few months putting real wages under further pressure. So although workers are set to become marginally worse off, there are more people in work. It is clear, however, 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.'

Meanwhile, Keith Richardson at Lloyds Bank Commercial Banking said April's rise 'can’t hide the fact that inflationary pressures, together with sluggish wage growth, are biting a chunk out of shoppers’ disposable income. Without prolonged sunny spells to prompt shoppers to refresh their wardrobe and buy a new BBQ, some retailers could be feeling unseasonably chilly in the months ahead.'

Alan Clarke, an economist at Scotiabank, added: 'With inflation likely to continue accelerating sharply, the headwinds facing the consumer will intensify, which in turn is likely to slow the pace of consumer spending later in the year.'

Helen Nugent is Online Money Editor of The Spectator