Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
British retail sales fell much more than expected in April as wet weather discouraged shoppers from the high street, with fewer purchases in clothing and furniture stores.
The quantity of goods bought in Great Britain fell 2.3 per cent between March and April following a mild contraction in the previous month, the Office for National Statistics said on Friday.
Economists polled by Reuters had forecast a 0.4 per cent drop.
The ONS said that sales volumes fell across most sectors, with clothing retailers, sports equipment, games and toys stores and furniture outlets doing badly as poor weather reduced footfall.
The Met Office, the UK’s national weather service, reported April 2024 as being a dull and wet month, with rainfall at 155 per cent of the average for the month.
The ONS figures come as separate data published on Friday by research company GfK showed UK consumer confidence rose to its highest level in more than two years in May, even if well below its pre-pandemic average.
However, some analysts said the larger than expected drop in sales could be a sign of consumers still struggling as a result of elevated prices and borrowing costs.
Charlie Huggins, head of equities at investment broker Wealth Club, said that while the figures were affected by the weather, they “do indicate that the UK consumer isn’t out of the woods”.
He added: “Inflation may have moderated, but prices of most goods and services remain much higher than a couple of years ago. This continues to instil a sense of caution in consumer behaviour.”
Falling sales will be disappointing for Prime Minister Rishi Sunak ahead of the snap general election he called for July 4. Sunak’s Conservatives trail Labour by 21 percentage points, according to the FT poll tracker.
Rob Wood, economist at Pantheon Macroeconomics, calculated that the fall in sales would cut the month-on-month April GDP growth by 0.1 per cent, taking the Q2 GDP growth to 0.3 per cent, half the pace in the first quarter.
But he was “optimistic that retail sales will quickly bounce back” due to falling inflation, as well as a national insurance tax cut and increase to state benefits, both of which took effect in April. Those changes would help household incomes and consumer sentiment, Wood said.
The quantity of goods bought by consumers has been declining since 2021 even as households spent more, reflecting the impact of soaring prices on household finances.
ONS data showed that in April, sales volumes were down 3.7 per cent from their February 2020 levels, before the pandemic, but consumers spent 15 per cent more.
April’s monthly drop in retail sales was larger across non-food stores, such as department, clothing and furniture, which registered a 4.1 per cent fall, the joint biggest decline since January 2021. Sales in clothing and household goods stores fell more than 5 per cent.
But sports events, such as the Euro 2024 football tournament, should help retailers in the summer, according to Oliver Vernon-Harcourt, head of retail at the consultancy Deloitte.
“With major sporting and entertainment events in the calendar, and the prospect of improved economic conditions to come, we would expect that this optimism filters through into increased spending and a more stable retail sector,” he said.
