U.K. April Retail Sales Surge on Discounted Food, Households

A Customer Shops for Food in a Supermarket in London
Food sales increased 3.6 percent in April from March, the biggest rise since April 2011, when they were boosted by a Royal Wedding and an extra public holiday, the ONS said. Photographer: Simon Dawson/Bloomberg

U.K. retail sales increased for a third month in April as a buoyant property market bolstered spending on household goods and price discounting saw food sales rise at the fastest pace in three years.

Sales including auto fuel surged 1.3 percent from March, when they rose an upwardly revised 0.5 percent, the Office for National Statistics said today in London. That compared with a forecast for an increase of 0.4 percent, according to the median estimate in a Bloomberg News survey. Sales jumped 6.9 percent in April from a year earlier, the most since May 2004.

The figures add to evidence that the economy sustained momentum in the second quarter, with sales in the latest three months rising at the fastest pace for a decade. The pound strengthened after the data were released and after minutes of the Bank of England’s latest meeting showed some officials thought the arguments in favor of an interest-rate increase were growing stronger.

“Elevated confidence, markedly higher employment and a much improved housing market overall are all supportive to consumer spending,” said Howard Archer, an economist at IHS Global Insight in London. “The encouraging prospect for retailers - and for overall growth prospects - is that consumers’ purchasing power should pick up over the coming months.”

While consumer spending bolstered the U.K. recovery last year, BOE Governor Mark Carney said last week that “the expansion will not endure through household spending.”

BOE Minutes

In the minutes released today, the Monetary Policy Committee said the decision was becoming “more balanced” for some of the nine members. However, all agreed that they needed to see “more evidence of slack reducing” before it would be time to increase the benchmark interest rate from a record low.

Excluding auto fuel, retail sales advanced 1.8 percent on the month and were up 7.7 percent from a year earlier. In the latest three months the volume of sales rose 1.8 percent, the most since the first quarter of 2004. Retail sales have posted three-monthly gains for 14 consecutive months, the longest stretch since 2007.

The pound increased 0.4 percent to $1.6905 at 9:50 a.m. London time and added 0.3 percent to 81.12 pence per euro.

Food sales increased 3.6 percent in April from March, the biggest rise since April 2011, when they were boosted by an extra public holiday for a Royal Wedding, the ONS said. Excluding April 2011, food sales last month rose at the strongest pace since records began in 1988.

Household Goods

Non-food sales declined 0.4 percent, dragged down by so-called other stores. Sales of clothing, household goods and spending at department stores all rose in the month. Sales of auto fuel fell 3.7 percent.

The ONS said retail prices measured by the deflator, a gauge of changes in shop prices, fell 0.3 percent in April from March, with food prices dropping 0.4 percent. From a year earlier, the deflator showed retail prices dropping 0.6 percent.

The amount spent online advanced 2.6 percent on the month and 13.3 percent from a year earlier.

Marks & Spencer Group Plc, the U.K.’s biggest clothing retailer, yesterday reported a third straight drop in annual profit, saying that while sales improved, it had offered more special offers and deeper discounts than anticipated.

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