Retail sales for the UK grew by 3.5% in May according to figures published by the ONS. That’s would be 8.1% annualised; nothing to be sniffed at. This runs contrary to the general picture of a slowing economy with tightening credit and anecdotal evidence of the same.
Many explanations could be given for the increase in retail spending. Many have suggested that downturns tend to have ‘one last hurrah’ rather like the ‘dead cat bounce’ of financial markets. There is also the possibility that heavy discounting has prompted greater sales numbers. Personally, I’ve seen something of the opposite; lowering retail sales, quieter high streets and less traffic on the roads. Others I’ve spoken to seem to be in agreement on this.
So, wherever the 3.5% extra retails sales were happening, apparently it wasn’t near me.
The ‘analysts’ quoted in today’s news stories point out that the Bank of England is more likely than ever to raise interest rates in an attempt to curb UK inflation which would curtail retail spending in their view. I’d counter that point with the fact that at least bank mortgage rates have been decoupled from the base-rate since about November 2007 so this should have less of an immediate effect for those indebted while preserving some of the buying power of those with savings.
Update: I just caught on VHForex that the last time there was such a big unexpected spike in retail sales (3.2%) it was March 1991, just before the UK fell into recession.
Tags: 3.5%, bank of england, inflation, interest rates, may, retails sales, sales, uk
Entries (RSS)