Financial News

  • 22 May 2014, 12:18

UK Retail Sales Growth Hits 10-Year High

A late Easter helped boost UK retail sales to a 7.7% growth rate year-on-year, officially relased figures have revealed.

The Office for National Statistics (ONS) said retail sales volumes jumped by 1.3% on the March figure, and 6.9% on the year - the highest since May 2004.

A consensus among economists had forecast the rise to be around 0.5% on the month and 5.2% on the year.

The ONS said food sales jumped 3.6% in April compared to March, and 6.3% on the year, taking the rate to its highest level for more than 12 years.

It said the spike in food sales was due to better weather and promotions in-store.

Non-food store sales rose 6.5% year-on-year but were down 0.4% on the month.

The increase in consumer spending has become a key driver of Britain's modest recovery from the financial crisis more than five years ago.

A trend in easing inflation and gentle wage growth, along with record low mortgage rates, has helped boost spending.

However ONS figures released on Tuesday showed inflation rising 0.2% month-on-month, eating into the wage recovery.

Figures from the Council of Mortgage Lenders (CML), also released on Wednesday, showed gross mortgage lending was an estimated 16.6bn in April - 8% higher than March's total.

The CML added that it was 36% higher than April last year and the highest total for an April since 2008 when it was 25.7bn.

Click and collect, and smartphone usage to research prices, is increasingly seen as a driver for high street purchases.

Meanwhile, the sector known as non-store/repair saw the biggest jump out of eight retail areas classified by the ONS.

It said year-on-year that sector grew by 25.1%, and 5.9% month-on-month.

But spending on fuel dropped both on the month and compared to last year, due to price suppression.

Figures showed motorists spent 3.7% less on fuel in April compared to March, and 0.7% down on the April 2013 figure.

Deloitte UK head of retail Ian Geddes said: "It is encouraging to finally see some strong figures in the food sector, as this remains a challenging market for the large grocers who are vigorously responding to consumers' changing retail habits and, are currently implementing significant structural reorganisation.

"This is clearly a long race and the large grocers are repositioning themselves to win over customers in the new, more complex era of multichannel retailing."