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Rising wages keep Brits shopping

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18/04/2019
UK shoppers were undeterred by the uncertainty over Brexit, with retail sales jumping 1.1% from February to March.

This was well ahead of economists’ predictions of a 0.3% contraction. This was the third month in a row of better-than-expected sales after a tough Christmas trading period for many businesses and a number of failures on the high street.

High levels of employment and rising real incomes have supported consumer spending. This is the largest part of the economy and has helped the UK economy to continue its growth in recent years even as businesses have cut back on investment and government austerity has continued.

Taken as a whole, retail sales rose by 1.6% over the first quarter, the biggest rise since August 2018 when spending was super-charged by the football World Cup and a heatwave.

Ed Monk, associate director for Personal Investing at Fidelity International, said: The week’s economic releases have ended with good news. Even accounting for the ‘Beast from the East’, which kept shoppers at home a year ago, todays retail sales data show households willing to spend more. That reflects a slow recovery from a decade-long wage squeeze and, perhaps, a willingness to look through the apparently never-ending uncertainty that is Brexit. Higher retail sales contribute to a picture of the economy beginning to show more positive signs. Growth is low, but falls in inflation appear over and real wages are rising, suggesting a little more steam in the economy.

“With rising inflation now a prospect again, and with significant rate rises looking unlikely, saving in cash over the long-term could cost you. Inflation can behave almost like a kind of hidden tax on savers and investors and can really eat into your returns, especially when this is compounded year after year. With prices rising, inflation can also take savers and investors by surprise, which is why it is important to get ahead of the game and make sure your money is working as hard as it can in the stock market.”

 

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