Retail sales rebound thanks to Easter food frenzy, but outlook concerns eyed

A thumping Easter trading period helped UK retail sales bounce back in April after a muted start to the year, though the industry sees the outlook as far from rosy.

The BRC-KPMG retail sales monitor showed strong food sales drove like-for-like sales growth to 5.6% in April from the fall of 1.0% in March, which was the Easter month last year.

This was the fastest rate of LFL sales growth for 11 years, even though there were five other occasions during that period when Easter occurred in the latest month but did not in the same month a year before.

Total sales in April jumped 6.3% year-on-year, from a 0.2% slip the previous month.

This pulled the three-month average to 2.0%, above the 12-month average of 1.3%.

Grocery sales were notably stronger than non-food.

For the three-months from February to April total food sales were lifted to 3.6%, or 2.4% on a like-for-like basis that is above the 12-month moving average of 2.0%.

Non-food LFL sales for the three months increased 0.3%, or 0.7% on a total basis, almost in line with the 12-month total average growth to 0.8%.

"As expected, the Easter holidays provided the welcome boost to retail sales, which goes some way to making up for the disappointing start to the year," said Helen Dickinson, chief executive of the British Retail Consortium.

"That said, the positive distortion from the timing of Easter was largely responsible for the month’s growth and looking to the longer-term signs of a slowdown, the outlook isn’t as rosy."

She said although shop prices are still down overall, other items of consumer spending are increasing and driving a tightening of purse strings.

"Although today’s figures do indicate that consumers are still willing to spend, with a cocktail of rising costs and slowing wage growth as the backdrop, conditions for consumers will get tougher.”

IGD CEO Joanne Denney-Finch said sales across March and April were up by around 4% on last year, exceptional growth by all recent standards.

"Partly, this is due to the return of some food inflation but the underlying demand for groceries was also very robust," she said.

“The public remains in a state of uncertainty though and we cannot be sure how long the good run will last. The number of shoppers expecting to be better off in the year ahead has dipped to 21% from 24% last month.”

Paul Martin, UK head of retail at KPMG, highlighted that although food and drink sales soared significantly in April, in the ultra-competitive grocery sector these growth figures "should be taken with a hefty pinch of salt, with margins under significant pressure and profitability remaining a concern".

Sam Tombs at Pantheon Macroeconomics said: "One strong month, however, does not suggest that the consumer-led slowdown is over. Business surveys have not indicated that either wage or employment growth improved recently. In addition, consumer confidence has continued to edge down, house prices have stagnated and banks are intending to restrict the supply of secured credit. Accordingly, April’s surge in retail sales just looks like a blip away from their weak trend."