With the economy finally showing signs of improvement shoppers are once more hitting the high street in earnest once more. Despite the fact that inflation remains a little high, the wealth of offers and promotions being rolled out by both commercial property-based and online retailers are allowing consumers to make the most of their disposable income – and this led to very positive results for the retail industry last month.
According to the Office for National Statistics (ONS), despite the fact that footfall fell in May, consumers spent a huge £27.1 billion, which is the highest recorded result since records began in 1988.
This caused a sales boom of 2.1 per cent, greatly outstripping forecasts made by City economists and leading to hopes of significant growth during the current quarter.
This news is further improved by the fact that sales volumes, which do not take the effects of inflation into account, also rose significantly – in fact, this category surpassed even the records set during the pre-recession years.
Chief economist at Markit, Chris Williamson, believes that the boom in sales indicates an overall strengthening of the UK economy.
He says; “Improved consumer confidence helped drive retail sales to the highest-ever in May, adding to signs that the UK economic recovery is gaining momentum.”
Thanks to the number of promotions offered by supermarkets, food sales managed to bounce back from a poor April result, recording a 3.5 per cent growth. This is the largest monthly rise seen in over two years, hopefully indicating further strong recovery in the coming months.
Yet it was not only high street retailers and supermarkets which benefited from a tangible boost in consumer confidence, as online retailers also managed to post very strong results. Online spending per week reached an average of £582 million accounting for 10 per cent of the overall sum and managing to record a 10.3 per cent rise when compared to the same period in 2012.
While this certainly seems to be good news, experts have warned that the strong results posted in May are quite possibly not sustainable as a result of ongoing wage freezes and inflation.
Economist at BNP Paribas, David Tinsley, says; “The question is whether this momentum can be sustained into the second half of the year.
“We remain concerned economy-wide real income growth will not be sufficient to see this.”
With the summer sun drawing consumers on to the high street and retailers pulling out all the stops to encourage spending, consumer confidence certainly seems much stronger than it has been for quite some time. It remains to be seen whether this bright mood will last, or whether financial limitations will cloud the retail industry’s blue skies once again in the coming months.
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