Retail sales jump more about timing than consumer confidence

April retail sales were 2.3% up on March and 4% ahead of April 2016, according to data from the Office for National Statistics (ONS), out today.

However, Andrew Sentance, senior economic adviser at PwC, said the jump had more to do with Easter falling later than with consumers digging deep into their pockets and purses:

 

"Although retail sales bounced back in April, we should be cautious in reading too much into this. The pattern of retail sales in March and April is traditionally very sensitive to the timing of Easter, so it makes sense to look at spending patterns over a number of months.

 

"The volume of retail spending in the past three months is just 0.3% up on the previous three months – representing an annual growth rate of just over 1%. This compares with 4-5% annual retail spending growth in the three years 2014-16.

 

"A significant retail slowdown is underway, as real wages are squeezed by higher inflation and slower employment growth. Consequently, consumers are likely to cut back on some areas of discretionary spending over the next couple of years as they face higher bills for their regular household expenses.

 

"We cannot expect the consumer to be such a strong driver of growth in 2017 and 2018 as in the past few years. As a result, the growth of the UK economy will slow - and we are likely to see further confirmation of this slowdown as we move through this year."

 

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