UK retail sales figures for April have exceeded economist’s expectations and grew 6.9 per cent compared with the same month a year earlier.
It is the strongest annual rise in ten years, said the Office for National Statistics (ONS.)
The ONS said food sales during the Easter holiday made a significant contribution to the overall figure.
Food sales rose 6.3 per cent year-on-year and rose 3.6 per cent month-on-month – the largest monthly rise since April 2011 when the royal wedding and extra bank holiday boosted food and drink sales.
Feedback from food store retailers suggested that a better than expected Easter and sunny weather helped to boost sales, the ONS added.
Ian Geddes, UK head of retail at Deloitte said it was “encouraging” to finally see some strong figures in the food sector. He said: “This remains a challenging market for the large grocers who are vigorously responding to consumers’ changing retail habits and, are currently implementing significant structural reorganisation. This is clearly a long race and the large grocers are repositioning themselves to win over customers in the new, more complex era of multichannel retailing.”
The figures were ahead of estimates from Capital Economics and Mastercard who predicted a 5.3 per cent and 5.5 per cent y-o-y rise, respectively.
The rebounding housing market has played a key role in consumer confidence as house prices continue to rise and the job market strengthens. However, Bank of England chief Mark Carney has warned the booming housing market represents the “biggest risk” to Britain’s economy as deputy prime minister Nick Clegg has said that the Help to Buy scheme could be “pared back” if the housing market is believed to be overheating.
David McCorquodale, UK Head of Retail at KPMG said it was a “solid” retail sales performance but added that concerns still remained with the grocery market.
“Some of the bigger grocers are propping up sales volumes with heavy promotional campaigns,” he explained. “This strategy is prompting some unease within the investor community, who are waiting to see how these price cuts will impact the grocers’ bottom line. However, whilst they may not be welcomed by investors, these price wars are good news for average consumers, who are being heavily courted with discounts and offers for their custom.”
The results come as weekly wage growth (inc bonuses) matched inflation for the first time in six years. Wages rose 1.7 per cent in the year to February as consumer prices index inflation fell to 1.6 per cent in March.