Retail sales rose in April (Philip Toscano/PA) (PA Wire)
The UK economy continues to defy “catastrophic predictions” of a 2023 recession as retail sales rose 0.5% in April, but economists warn it is only a matter of time before rising interest rates hit customers back. forced to cut.
Growth was ahead of expectations according to today’s official figures, as buyers returned to the high street after historically wet weather kept them at home in March. Department stores saw the fastest growth of 1.6%, but sales at supermarkets also rose for the first time since August 2022, despite rising food costs as well as clothing stores and online.
Sales were still down from April 2022, although inflation meant that the amount spent was up by about 5%.
Danny Hewson, head of financial analysis at AJ Bell, said: “March was ridiculously wet, but it was also the gap between February’s Valentine’s splurge and April’s chocolate bonanza.
“With inflation so high and budgets stretched, people are using every trick in the book to make sure they can relive those magical moments with friends and family without breaking the bank.”
Charlie Huggins, manager of quality shares portfolio at Wealth Club, said the figures suggest the UK economy is more resilient than many expected: “No one is going to look at these figures and claim consumers are feeling flush.” But at the same time the doomsday predictions for the UK economy in 2023 are proving too broad.
But Ashley Webb, UK economist at Capital Economics, warned that the recession could still continue as the effects of interest rate rises filter through to shoppers: “Even if the worst of the fall in retail sales is past, we suspect That higher interest rates will hold back spending later this year.
Traders in the city are betting that interest rates will rise to 5% by August and 5.5% by December.
RSM UK economist Thomas Pugh said: “The bigger risk is that inflation proves more stable than expected, forcing the Bank of England to raise interest rates by 5% or more. could wipe out the recovery and push the economy into recession later this year.
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