Retail sales figures major surprise as food stores in focus

The Herald Scotland

23-05-2025

The month-on-month rise in retail sales volumes in April was six times the 0.2% increase forecast by economists polled by Reuters.
However, the ONS revised the month-on-month rise in retail sales volumes in March down from 0.4% to 0.1%.
Food store sales volumes grew strongly in April, increasing by 3.9% month on month, with the ONS noting retailers had attributed this to 'the good weather' but also observing the rise saw this category 'mostly recovering from falls in February and March'.
The ONS said of the April picture: 'Supermarkets, specialist food stores such as butchers and bakers, and alcohol and tobacco stores all grew during the month, with some retailers attributing this to the good weather.'
Non-food store sales volumes fell by 0.7% month on month in April.
The ONS said: 'This was because of falls in clothing stores and other non-food stores, such as sports and games retailers, and second-hand goods stores.'
It noted these falls in sales volumes 'mainly followed strong growth in March'.
The EY ITEM Club think tank said: 'April delivered a fourth successive rise in UK retail sales following a significant uptick in food sales. However, it's unclear as to whether underlying conditions are as strong as this data suggests, with sales likely to fall back in the coming months.'
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It added: 'The outlook for retail sales further ahead is dependent on the mood of consumers. Weaker real income growth, tighter fiscal policy, and the lagged effects of past interest-rate rises represent powerful headwinds to spending. But if consumer confidence remains resilient, there is scope for spending growth to align more closely with household income growth.'
Matt Swannell, chief economic advisor to the EY ITEM Club, said: 'The retail sales data has been exceptionally strong in recent months, but it's unclear as to whether underlying conditions are quite as robust as the data suggests.
"Furthermore, there was a puzzling inconsistency in official data for Q1, with both retail sales and output of non-retail consumer-facing sectors growing strongly despite a very soft outturn for consumer spending. The ONS's difficulty in adjusting for changes in seasonal spending patterns since the pandemic is probably part of the story.'
He added: 'Looking ahead, we expect to see some payback for the string of recent upside surprises, with sales set to fall back in the coming months. Beyond that, the consumer outlook is mixed.'
Nicholas Found, at consultancy Retail Economics, noted a 'glimmer of momentum' in the retail sales figures but flagged a 'more challenging reality'.
He said: 'Retailers welcomed some much-needed sunshine, as shoppers returned to DIY and gardening, while lighter evenings and social gatherings lifted food and drink spending, which had seen sluggish growth in recent months.
"Yet beneath the glimmer of momentum lies a more challenging reality. Value remains the overriding priority for consumers, with demand concentrated around carefully timed promotions and events, as high living costs and elevated interest rates continue to shape behaviour.'
Mr Found added: 'At the same time, Budget and tariff-related costs are coming in, putting pressure on profitability. Retailers are navigating an increasingly complex environment, where protecting margins, sustaining investment and staying competitive is becoming harder. With economic uncertainty persisting and consumers still cautious, the resilience gap between those who can and cannot adapt will only widen.'