UKretail sales rose strongly again in May, with clothing and department stores enjoying brisk trade, according to official figures yesterday that support the Bank of England's expectation of a bounce-back in consumer spending growth.
National Statistics said yesterday that retail sales volumes grew by a seasonally-adjusted 0.5per cent last month - bang in line with City expectations - hiking the annual rate of increase from 3per cent in April to 4per cent in May. The month-on-month increase in April was revised up from 0.6per cent to 0.7per cent.
Sales had been expected to receive a fillip in the run-up to the football World Cup, given demand for such items as flatscreen televisions particularly south of the border.
However, the 0.5per cent increase in volumes in May was assisted by all sub-sectors except for a food category that saw unchanged sales but is likely to benefit this month from demand for such World Cup accompaniments as beer and crisps.
Clothing, footwear and textiles enjoyed a 1.5per cent jump in sales volumes in May, and a non-specialised category that takes in department stores recorded a 0.7per cent increase. Household goods sales volumes were up 0.4per cent on the month.
The 4per cent annual increase in retail sales volumes in May was the greatest since December 2005.
Although National Statistics' implied def lator indicated retail sales were struck in May at prices 0.9per cent less than in the same month of 2005, this was an improvement on a year-onyear decrease of 1.2per cent in April and was the least sharp fall since February.
While the retail sales numbers were strong, they are unlikely to change the picture signalled on Monday night in Edinburgh by Bank of England Governor Mervyn King that a rise in UK base rates from their current level of 4.5per cent is not imminent.
However, the Bank of England's interest rate-setting monetary policy committee is likely to keep a close eye on the implied deflator given its concern about rising prices for imports.
Comparing the three months to May with a year earlier to smooth out volatility in the monthly numbers, retail sales volumes showed annual growth of 3.2per cent. This was the strongest annual increase since the three months to January 2005.
On the same basis, household goods sales are up 5.8per cent and this is the strongest annual increase since November 2004.
Non-specialised stores are showing an increase of 3.3per cent which is the biggest since February 2001, and the clothing, footwear, and textiles category a rise of 2.5per cent which is the strongest since May 2004.
Lucy O'Carroll, director of research at HBOS's treasury services division, said last night: "There are a number of records - not huge historical records but a number of records - being broken here."
Of the jump in overall retail sales during May, she said: "We had been expecting them to be strong, partly because of sales of flat-screen TVs. It wasn't just a World Cup story by any means. Sales were strong across all sectors, except food."
However, she did not believe the retail sales numbers would send the MPC rushing to pull the interest rate trigger.
O'Carroll said: "In terms of what it means for interest rates, the monetary policy committee had been expecting consumption to pick up this year, so wouldn't have been unduly surprised by the strength of the retail sales figures.
"They will also be mindful of the fact that the figures released for May, but also for June and maybe July, will be affected by special World Cup factors. It is difficult to get through this statistical fog of one-off events like the World Cup."
However, she believed the May sales numbers supported the Bank's expectation that household spending growth would pick up from a relatively anaemic rate of 0.2per cent in the first quarter.
Chancellor Gordon Brown yesterday told Parliament he expected the UK economy to continue improving this year.
"Growth in the second half will be stronger than in the first half, " said Brown, who looks on course to achieve his 2per cent to 2.5per cent forecast for overall UK economic growth this year.
Commenting on the less negative retail price deflator in May, O'Carroll said: "If the trend were to continue, it would be interesting in the context of two things. One is: is this a sign of the high street retailers finally being able to push price increases through in some sectors?
"Second, is that a symptom of the fact that import price inf lation has started to pick up, and this is an issue that is very much in the front of Bank of England governor Mervyn King's mind."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article