Retail sales ‘keep the economy chugging along’
23 June 2023
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Commenting on today’s retail sales figures which showed consumer confidence increasing despite inflationary pressures, Professor Len Shackleton, Labour Market Expert at the free market think tank The Institute of Economic Affairs, said:
“Today’s release of May retail figures is more than usually difficult to interpret, given that there was an extra bank holiday for the coronation, two days of rail strikes, and some very warm weather, all of which will have affected sales figures.
“There was a fall in food stores sales volume, perhaps unsurprising in view of continuing rapid inflation in food prices, and a smaller fall in non-food stores sales – rowing back from the rise in this category last month.
“On the plus side, non-store (primarily online) sales volume was up by 2.7 per cent on the month, a good performance probably driven by summer clothes and outdoor-related goods. Fuel sales volume was also up, which reflected slightly lower petrol prices and possibly the effects of the rail strikes.
“Overall, retail spend continued its April rise in real terms, which is an achievement considering the continuing fall in real incomes for many people as inflation outstripped pay, as it has done for many months. Retail continues to keep the UK economy chugging along, as it has done so often in the past.
“But it remains to be seen whether this can continue for very much longer with the big hike in interest rates. As the effects of the consequent higher mortgage payments spread over the next few months, and with inflation still eroding pay, consumers will surely start reining in discretionary expenditure.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
“Today’s release of May retail figures is more than usually difficult to interpret, given that there was an extra bank holiday for the coronation, two days of rail strikes, and some very warm weather, all of which will have affected sales figures.
“There was a fall in food stores sales volume, perhaps unsurprising in view of continuing rapid inflation in food prices, and a smaller fall in non-food stores sales – rowing back from the rise in this category last month.
“On the plus side, non-store (primarily online) sales volume was up by 2.7 per cent on the month, a good performance probably driven by summer clothes and outdoor-related goods. Fuel sales volume was also up, which reflected slightly lower petrol prices and possibly the effects of the rail strikes.
“Overall, retail spend continued its April rise in real terms, which is an achievement considering the continuing fall in real incomes for many people as inflation outstripped pay, as it has done for many months. Retail continues to keep the UK economy chugging along, as it has done so often in the past.
“But it remains to be seen whether this can continue for very much longer with the big hike in interest rates. As the effects of the consequent higher mortgage payments spread over the next few months, and with inflation still eroding pay, consumers will surely start reining in discretionary expenditure.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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