Caution urged after late Easter lead to retail sales surge

Retail sales surged in April thanks to the late scheduling of Easter holidays, but shop owners are being told to remain cautious despite the strong figures.

Data from the British Retail Consortium (BRC) and KPMG showed that like-for-like UK retail sales jumped 5.6% last month compared to a 0.9% decline a year earlier, while total sales climbed 6.3%.

That is the highest level for total sales since Easter last took place in April in 2011.

Paul Martin, UK head of retail at KPMG, said: "April's sales provided a brief period of respite for retailers following a relentless start to the year.

"However, much of the rise was driven by the timing of Easter and the growing inflationary pressures the sector is facing, rather than a sudden upswing in consumer confidence."

Food sales were a main driver, increasing 2.4% on a like for like basis and 3.6% on a total basis in the three months to April.

That is compared with a 0.3% rise in like-for-like non-food sales - which were up 0.7% on a total basis - over the same period.

Mr Martin said that while the figures seem to be good news for supermarkets, he warned they should be taken with a "hefty pinch of salt" given that margins in the competitive grocery sector are still under significant pressure, making profitability an ongoing concern.

Supermarkets have started to increase their prices to help offset the pressure of rising import costs, resulting from the post-Brexit vote collapse of the pound.

That move has helped drive inflation to 2.3%. If price rises continue to outpace wage growth, experts say consumers are likely to become more cautious about spending, causing further pain for retailers.

"Looking ahead, retailers need to ensure that this month's boost doesn't lull them into a false sense of security. The retail landscape is changing fast and as such, agility and the ability to manage costs will remain critical," Mr Martin said.

Good news came from online sales of non-food items, which grew 8.2% over the three months to April, though in-store sales dropped 1.3% on a total basis and 1.8% in like-for-like terms.

However, that is broadly in line with the 12-month average decline of 1.7%.

Separate figures from Barclaycard showed that inflation and Easter spending pushed consumer spending up 5.5% year-on-year in April.

Expenditure on essentials jumped 11.4% compared to 2016, with supermarket spending rising 10.3% and petrol surging 14.7%.

The data showed that only 56% of consumers feel confident about their household finances, down from 70% in March, and two thirds of Brits now focused on getting value for money on their purchases.

The rising cost of everyday goods sent shoppers hunting for bargains, resulting in a 16.6% rise in discount store spending.

Barclaycard managing director Paul Lockstone said: "With a renewed focus on value for money it is likely that consumers will need to make necessary adjustments to their monthly budgets in a bid to balance essential and discretionary spending."