Tue, 28 Jun 2022

Retail sales in Great Britain jump despite soaring inflation

Robert Besser
24 May 2022, 17:21 GMT+10

LONDON, England: British consumers continued to shop as normal last month, despite the highest inflation rate in 40 years, with the Office for National Statistics reporting a 1.4 percent monthly jump in retail sales in April.

However, it warned that the buying was still weak and that part of the increase could be due to people staying in their homes to save money.

"April's rise was driven by an increase in supermarket sales, led by alcohol and tobacco and sweet treats, with off-licences also reporting a boost, possibly due to people staying in more to save money," said Heather Bovill of the Office for National Statistics, as quoted by The Guardian.

"Clothing sales had a strong month, especially online, with some retailers suggesting consumers were purchasing clothes for summer holidays and weddings."

Over the three months to April considered a better guide to the underlying trend than one month's data retail sales fell by 0.3 percent on the previous quarter.

Even so, the rise in spending surprised observers, who had expected the contributions to higher national insurance and new energy price caps to lead to reduced expenditures last month.

Earlier this week, the Office for National Statistics reported that the annual inflation rate jumped from 7 to 9 percent in April, while the latest snapshot of consumer confidence from GfK showed the mood at its gloomiest since it began keeping records in 1974.

"The reading contradicts recent consumer confidence data and suggests that near full employment and the ability of consumers to tap into savings accrued during the pandemic may be preventing shoppers becoming overly cautious, despite the cost of living challenges associated with high levels of inflation," said David Baker of the accounting firm Mazars, as reported by The Guardian.

Meanwhile, Nicholas Farr, an economist at Capital Economics said, "The unexpectedly strong 1.4 percent month-on-month rise in retail sales in April suggests that the cost of living crisis hasn't caused consumer spending to collapse and means that the economy may have a little more momentum than we thought."

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