Fastest retail sales growth in a decade
Retail sales volumes continued to grow robustly in April, according to the latest estimates released today by the Office for National Statistics (ONS). Compared to the same month a year ago, the quantity of goods bought in the retail industry was 6.9% higher in volume terms, the fastest year-on-year growth since May 2004.
In April, three out of the four main retail sectors (food stores, non-food stores, and non-store retailing) saw a year-on-year increase in quantity bought whereas the fourth sector, petrol stations, saw a fall of 0.7%. The best performer was non-store retailing, which comprises primarily of internet sales, where sales volumes grew by 25.1% over the 12 months. The second fastest growing was department stores, where quantity bought increased by 9.2% compared to the same month a year ago.
Robust overall performance in retail sales may have been supported by easing inflation, as the average prices of non-fuel goods sold by retailers in April was unchanged year-on-year. This is the slowest pace of price growth recorded since September 2009. The stabilisation of retail prices over the year is reinforced by a slowing in food store annual inflation to 0.9%, down from 1.8% in March 2014, alongside a strong growing season for vegetables this spring and price competition between supermarkets. In addition, annual price deflation was seen across much of the rest of the retail sector.
Strong retail sales performance in the year to date has come alongside rising consumer confidence, shown by the YouGov/Cebr Consumer Confidence Index. Confidence has risen due to an increase in the number of employees experiencing pay rises, promotions and bonuses in 2014. As unemployment continues on its downward trend and earnings growth is forecast to be above the rate of inflation in 2014 we expect these factors to help bolster retail sales helping it to continue on a positive trend this year.