Retail sales grew 1.4% in April despite the crushing weight of 9% inflation, as UK consumers spent on alcohol and clothing in the countdown to the summer season, according to the latest report from the Office of National Statistics (ONS).
“The unexpected upturn in retail sales could be viewed as a positive sign that the consumer isn’t as bruised as other data suggests,” said AJ Bell financial analyst Danni Hewson.
Food sales rose 2.8% as a result of increased spending on luxury items including tobacco and alcohol, with supermarket food sales remaining flat.
“But digging into April’s figures the big uptick in food and drink spend in supermarkets might indicate that people are choosing their kitchen tables over pubs and restaurants as they look to save money,” said Hewson.
“Whilst food spend has been largely unchanged, which suggests people are still being cautious, spend on alcohol and tobacco has soared.”
“Life’s little luxuries, the things that help us get by when times are tough, will have to come in under budget as those budgets are tested.”
Meanwhile, online and non-store retailers saw a 3.7% surge in light of stronger clothing sales.
“Summer 2022 will still be a time for postponed events and much anticipated holidays. After a couple of years where only the top half was visible to most of the world people are updating their wardrobes,” continued Hewson.
Online retail sales accounted for approximately 27% of total UK retail sales, representing an uptick from 25.9% in March and marking a significant rise from pre-pandemic levels of 19.9% in February 2020.
Vehicle fuel sales saw an uptick of 1.4% following a 4.2% fall the previous month, as consumers adjusted to the shock of spiking petrol prices.
The ONS commented that non-food store sales volumes dropped by 0.6% on the back of a decline in other non-food stores, which fell 3.3% alongside a 0.5% slide in household good stores, such as furniture outlets.
“When you look at other non-food retail, that has dropped back. People can only spend a pound once and when that pound is worth significantly less than a year ago people have to make choices,” said Hewson.
“DIY projects are being parked; home improvements slipped to the back of the queue as people prioritise the way they look over their living spaces.”
The unexpected increase in retail sales has been caveated with a note of caution, as the trend for the past three months has actually been in decline, alongside the latest consumer confidence survey, which indicates that despite the retail sales jump, the big picture is bleak.
“If you look at the last three months as a whole, the trend is a downward one and when you add in the latest consumer confidence survey by GFK, optimism seems a bit out of place,” said Hewson.
“Consumers are terrified about how they’ll weather the next few months, every month they are finding that their personal financial situation is deteriorating and most believe the worst is still to come.”
Meanwhile, Target’s shocking 25% stock sink earlier in the week served as a warning across the Atlantic that customers have already started paring back on former staples in their shopping cart in a move to save cash, as inflationary pressures loom in the macroeconomic sphere.
“Retailers are already feeling the pinch and outlooks from a number of big American names over the last week have sent shockwaves through global financial markets,” said Hewson.
“Big ticket items will gather dust on shelves and shoppers will become increasingly cut-throat when it comes to value.”
The ONS report might have given retailers cause for relief, however the odds are stacked against them as the summer months peel away to autumn and inflation hits a projected high of 10% in October.
The cold snap of the cost of living is already eating into consumer wallets.
“It’s all about priorities. This month people have prioritised preparing for future good times, next month they might have to save any spare cash to actually pay for those good times,” said Hewson.
“Retailers know they’re in hot water and can do little to turn down the heat.”
