UK consumers hit the shops after early 2018 freeze
LONDON (Reuters) – British shoppers ramped up their spending in May after a snowbound start to the year, two surveys showed on Tuesday, the latest suggestion that the overall economy is recovering from its early 2018 slowdown.
With the Bank of England watching for signs that the weakness in the economy in the first quarter was only temporary before it raises interest rates again, the British Retail Consortium (BRC) said total retail sales values jumped by an annual 4.1 percent in May.
That was the biggest rise in more than four years excluding distortions caused by different timings of Easter.
Both surveys showed spending on non-essential items picking up, possibly reflecting an easing of the squeeze on many households who have been hit by rising inflation and weak wage growth for much of the period since the June 2016 Brexit vote.
Barclaycard said the 4.6 percent increase in non-essential spending growth was the strongest in 14 months with hot weather helping sales at garden stores, which were up 50 percent over the early May bank holiday weekend, and at other retailers.
Inflation has waned in recent months while wages grew bit more strongly, even if consumers remain wary.
“Despite this more positive set of sales results, the retail environment remains extremely challenging, with trend growth still very low by historical standards,” Helen Dickinson, chief executive of the BRC, said.
Barclaycard said fewer consumers had confidence in their household finances in May and, despite inflation falling to a 13-month low in April, fewer than one in 10 consumers felt they had experienced a positive impact on their spending power.