UK retail sales fell more then expected during rainy spell

UK retail sales fell at the fastest pace this year as consumers delayed spending due to rainy weather and uncertain economic conditions, underlying the hurdles facing the Conservative government’s bid for reelection.

The volume of goods sold in stores and online plunged 2.3% in April after a downwardly revised 0.2% decline the month before, the Office for National Statistics said on Friday. That was much sharper than the 0.5% drop economists had expected. It was also the worst reading since December, when the UK economy had dipped into recession. 

Prime Minister Rishi Sunak’s government is betting an improving economy will help close a 20-point gap with the Labour opposition in the general election set for July 4. Official data from retailers underscored a continuing cost-of-living squeeze, with shoppers paying more to buy a smaller basket of goods after the worst inflation in four decades. 

Clothing, sports equipment, games and furniture sales did poorly as poor weather reduced footfall in stores, the ONS said. Sales fell 2.7% from a year ago in April, worse than the 0.4% gain the month before.

The British Retail Consortium earlier this month warned that April was a bleak month after gloomy weather dissuaded consumers from buying summer clothing or garden furniture. 

The Met Office said the month continued “unsettled, wet and dull” weather and brought heavy rain to Scotland, Wales and parts of western England. Heavy gales accompanied Storm Kathleen at the start of the month.

Consumer confidence improved for a second consecutive month, thanks to a rosier economic outlook and a boost to household budgets as inflation hit a near 3-year low.

The market research firm GfK Ltd. said its sentiment tracker climbed two percentage points to minus 17 in May. That’s stronger than the minus 18 expected by economists surveyed by Bloomberg and well above levels a year earlier when the cost-living-crisis was still biting hard.

“With the latest drop in headline inflation and the prospect of interest-rate cuts, the trend is certainly positive after a long period of stasis,” said Joe Staton, client strategy director at GfK. “Consumers are clearly sensing that conditions are improving. This good result anticipates further growth in confidence in the months to come.”

GfK’s measures of personal financial prospects, savings and the general economic outlook all posted gains. However, an index tracking the willingness of households to splash out on big-ticket items declined one point to minus 26, “reinforcing the fact that the cost-of-living crisis is still a day-to-day reality for all of us,” Staton said.