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Hot weather sees boom in April retail sales

Written by: Adam Lewis
Consumers seem to have shrugged off falling real wages, with retail sales surging 2.3% in April compared with March 2017, according to official statistics.

After yesterday’s news that real wages are falling, the theory went that squeezed household budgets would likely hit retailers in the pockets. However April’s figures managed to beat expectations, with year-on-year retail sales increasing by 4.0%

According to the Office for National Statistics (ONS), anecdotal evidence suggested that April’s warm weather encouraged people to spend on food, home improvements and gardening equipment.

Commenting on the figures, Ben Brettell, a senior economist at Hargreaves Lansdown, said: “April’s figures were always expected to be better than March, because of the timing of the Easter holiday, but economists had forecast a smaller rebound of 1.0%, and much more subdued annual growth of 2.0%.

“The balance of probability suggests that at some point the combination of higher inflation and lacklustre wage growth will take its toll on the UK consumer. But today’s numbers provide some welcome evidence the economy has made a brighter start to the second quarter following disappointing GDP growth of 0.3% in Q1. With the labour market looking relatively robust, it’s possible the current mood of pessimism is unjustified.”

Michael Baxter, an economics commentator at The Share Centre, said: “Developments in the labour market, are having a contradictory effect. On the one hand, UK unemployment is down to its lowest level since 1975, but despite this employment is still rising strongly. On the other hand, average real wages are either falling or rising very slowly depending on which measure you use. With bonuses, they rose by 0.1% in the three months to March, without bonuses they fell by 0.2%.

“Inflation is expected to rise over the next few months putting real wages under further pressure. So although workers are set to become marginally worse off, there are more people in work.

“It is clear these are tough times for retail, particularly for those businesses that do not implement a plan to make maximum use of emerging technologies. In the years ahead, successful retailers will be the ones that embrace technology most effectively.”

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