Retail sales surged in April, recovering from a dip in May and defying both Brexit uncertainty and inflation, but a report shows the divorce with the EU is weighing on consumers’ minds.
The Office for National Statistics in the UK reported retail sales were up by 2.3 percent compared to the previous month and up 4.0 percent over April 2016. Good weather was largely attributed to the growth, overriding any fears related to rising inflation.
The results beat economists’ forecasts, which were set at 1 percent, and showed the biggest monthly uptick since January 2016, according to The Guardian.
While every other store represented in the findings saw positive gains, only department stores underperformed with a 0.9 percent decrease in sales for the month, dragged down by apparel and footwear stores in particular.
Despite the good news, a report from market intelligence agency Mintel shows British shoppers are bracing for higher prices at the register as the country’s divorce from the European Union looms. The survey shows that 83 percent of Brits think prices for goods and services Post-Brexit will rise. Fifty-nine percent are concerned about grocery prices while 26 percent fear heftier price tags on clothes.
These worries are coupled with concerns over healthcare, the environment and the British economy in general. Overall, 46 percent of UK consumers say the exit from the European Union will negatively impact the cost of living.
“Mintel research underlines particular concern about the rising cost of in-home food, and inflation is undoubtedly going to squeeze household budgets,” said Jack Duckett, senior consumer lifestyles analyst at Mintel. “However, broader consumer confidence is still relatively strong. Despite rising prices, most people still expect their finances to hold up well over the next year.”
Consumer spending is expected to hit 1.4 trillion pounds by 2021, a 17 percent increase over the 1.2 trillion pounds spent in 2016.
While Mintel predicts certain categories like food service and leisure and entertainment will “flourish” between now and 2021, its outlook for apparel and accessories is not as rosy, as consumers prioritize experiences over acquisitions. As a result, the projection is for a 1.9 percent rise in sales in clothing, accessories and footwear in 2017.