Spending boost buoys retailers
- Credit: PA
Retail sales are “bounding ahead” as falling prices and a boost to consumer spending power is giving retailers the most upbeat outlook for 27 years, according to new figures.
The latest survey from the CBI showed 60% of retailers saw sales rise in the year to May, with just 9% reporting a fall, giving a balance of 51% - far greater than expected and the strongest reading since the Christmas sales boost in December last year.
And the poll revealed a balance of 58% of retailers are expecting sales to rise again in the year to June, which is the best reading for 27 years.
The figures come after official retail sales figures last week showed April’s unseasonally warm weather, combined with lower prices, saw sales volumes jump by a bigger-than-expected 1.2% last month, recovering from a surprise 0.7% fall in March.
The CBI data suggests the buoyant conditions on the high street have continued despite the more unpredictable weather so far this month, with the survey of 134 firms - including 63 retailers - carried out between April 30 and May 15.
Consumer finances are being boosted by falling prices, with the UK now experiencing deflation for the first time since 1960 after inflation turned negative in April.
Shoppers are benefiting at last from a welcome pick-up in real wage growth.
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Rain Newton-Smith, CBI director of economics, said: “Retailers will be encouraged to see growth in sales and orders on the high street bounding ahead.
“Low inflation, which we expect to remain below 1% for the rest of the year, has given household incomes a much-needed boost and greater spending power.”
The bumper May result follows a CBI survey reading of 12 last month.
Howard Archer, chief European and UK economist at IHS Global Insight, cheered a “cracking” survey result.
He added: “It is looking increasingly likely that robust consumer spending will help the UK economy regain momentum in the second quarter after gross domestic product growth moderated to just 0.3% quarter-on-quarter in the first quarter.”