UK retail sales (May) – 23/06 – for an economy that is wrestling with food price inflation of close to 20% the resilience seen in the UK consumer has been even more surprising so far this year. Consumer confidence has improved as petrol prices have come down and certainly helped with some of that, however we also can't ignore the recent rising in interest rate costs that could well start to act as a drag in H2 of this year.
In April we saw retail sales excluding fuel rise by 0.8%, partially reversing a sharp -1.4% decline in March, which in turn reversed a 1.4% gain in February. The gain in April was even more surprising given the rise in tax rates, including council tax and other utility bills that kicked in at the start of the fiscal year. For May estimates are for retail sales to fall by a modest -0.2%, even with recent updates from a few UK retailers pointing to continued resilience when it comes to spending patterns.
