Retail sales "reversal" predicted
16 June 2011 10:01
A sharp reversal in sales will be revealed today after retailers suffered a hangover from the royal wedding, Easter and a run of bank holidays.
Sales volumes lifted by 1.1% in April but this better-than-expected performance is likely to have been offset during May as the sector resumes its recent downbeat trend.
Howard Archer, chief economist at IHS Global Insight, expects the Office for National Statistics to report a 0.6% decline in sales volumes month-on-month.
Victoria Cadman at Investec Securities is gloomier still and suggests the fall could be as much as 0.9%.
On an annual basis, Mr Archer expects annual growth to fall to 1.5% in May from 2.8% in April, while Investec's forecast would see the year-on-year rate decline to 1.2%.
A comparable survey from the British Retail Consortium for May showed retail sales by value were 2.1% lower on a like-for-like basis, while the CBI's most recent monthly retail survey also weakened.
CBI director-general John Cridland said: "Household budgets are being persistently squeezed by the gap between price inflation and weak wage growth."
Consumer inflation figures on Tuesday showed big rises for food, drink and fuel even though the headline rate stayed steady at 4.5%.
Retailers have been feeling the pinch across all product ranges, with baby-and-child care retailer Mothercare, entertainment group HMV, sportswear firm JJB and electrical retailers Comet and Dixons all unveiling store closure programmes in recent weeks.
Some retailers continue to thrive, but these have tended to be highly targeted niche chains that focus on the more affluent consumer, such as luxury brands specialist Burberry, Majestic Wine and fashion chain Ted Baker.
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