UK Retail Sales Rise For First Time In 4 Months
March 23 2017 - 4:29AM
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UK retail sales increased for the first time in four months in
February despite high inflation squeezing purchasing power of
consumers.
The retail sales volume grew 1.4 percent month-on-month in
February, reversing a 0.5 percent fall in January, the Office for
National Statistics said Thursday.
This was the first increase in four months and exceed the
expected growth of 0.4 percent.
The latest retail sales figures will provide some reassurance
that higher inflation has not brought growth in consumer spending
to a complete halt, Paul Hollingsworth, a UK economist at Capital
Economics, said.
That said, the outlook for spending this year is certainly
weaker than in 2016, the economist added.
However, the underlying pattern as suggested by the three
month-on-three month movement decreased by 1.4 percent for the
second month in a row. This was the largest decrease since March
2010 and only the second fall since December 2013.
It looks highly likely that retail sales volumes will contract
over the first quarter - and very possibly markedly, IHS Markit
economist Howard Archer said. Sales volumes will need to grow 3.2
percent month-on-month in March just to have been flat
quarter-on-quarter.
Excluding auto fuel, retail sales volume climbed 1.3 percent in
February from the prior month, in contrast to a 0.3 percent fall in
January. Sales were expected to grow 0.3 percent.
Food store sales edged up 0.1 percent and non-food store sales
climbed 1.8 percent in February after easing 0.3 percent each in
January. Auto fuel sales recovered in February, up 2.9 percent.
On a yearly basis, the retail sales volume growth accelerated to
3.7 percent from 1 percent in January. This was also faster than
the expected 2.6 percent.
The annual growth in sales volume, excluding auto fuel, improved
to 4.1 percent from 2.1 percent. Economists had forecast a 3.2
percent rise.
Bank of England Deputy Governor Ben Broadbent said Thursday the
negative effects of the currency weakness on consumption are
expected marginally to outweigh its more positive effects on other
parts of demand.
The policymaker noted that the weakness in sterling represents a
sweet spot for exporters, but it is unlikely to last
indefinitely.
The Distributive Trades Survey published by the Confederation of
British Industry on Thursday revealed that UK retailers reported a
steady pace of expansion in sales volume in March and forecast it
to accelerate in April.
The retail sales balance came in at +9 percent in March, the
same as in February, but well above the expected level of 4
percent.
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