Rate rises do not dampen UK consumer appetite
The effect of rising interest rates has not yet percolated down to the spending habits of the British consumer, according to a report from the British Retail Consortium (BRC).
Sales of food and drink were strong in February, boosted by a move to healthy eating as sales of fresh fruit and vegetables rose at the expense of less healthy items like confectionery.
Like-for-like sales were up 3.3% on last year, the largest rise since mid-2006, with the recent bird flu scare failing to make much of an adverse impact on poultry sales.
BRC director general, Kevin Hawkins, said: “It would appear that the November and January interest rate increases have yet to work through to consumer spending.
“Clothing and big ticket categories in general, however, remained sluggish and growth remains heavily slanted towards the grocery sector.”
The figures endorse research from the Confederation of British Industry (CBI), released last week, which showed that retailers experienced an increase in their trade in February.
Total sales growth in February, which includes new shops that opened that month, picked up to 5.6% from 5.2%.
However, consumers were averse to buying clothing and top of the range electrical equipment like audio systems and DVD players, while large discounts were applied to household items to clear old stock.