Royal wedding, hot weather lift Britain's retailers

19th May 2011, Comments 0 comments

British retail sales surged last month on the back of the royal wedding, sunny weather and a late Easter but analysts warned of only a temporary boost amid weak consumer sentiment and flat economic growth.

April retail sales jumped 1.1 percent compared with March, the Office for National Statistics said in a statement.

That was the biggest month-on-month April increase since 2002 and topped market expectations for a rise of 0.7 percent, according to analysts polled by Dow Jones Newswires.

Retail sales were up 2.8 percent compared with April 2010, again beating forecasts for a 2.4-percent gain.

"It must be noted that April 2011 was an unusual month for a number of reasons," the ONS said.

"It was the warmest April since records began. There was a special bank (public) holiday for the royal wedding (and) the royal wedding itself."

Clothing and food sales jumped as Britons splashed out to celebrate Prince William's wedding to Kate Middleton on April 29, which was declared a public holiday.

Shopkeepers were also lifted by the Easter holiday break, which was in April this year -- but fell in March last year.

"UK retail sales flourished during April," said economist Shehan Mohamed at the Centre for Economics and Business Research (CEBR) consultancy.

"The hottest April weather since records began and the royal wedding bank holiday weekend both acted together to boost the ailing retail sector."

He added: "Delving deeper into today's figures, both the clothing and food sector benefited from the royal dividend."

The ONS will publish a detailed estimate in July about the impact of April's unusual events.

Economists welcomed rising retail sales but argued that the sector remains in trouble, with consumers still pressured by soaring inflation, a weak property market and a stagnant economy.

Sentiment was also hit by the government's tough austerity measures, particularly after a hike in VAT sales tax at the start of 2011.

"While welcome, we strongly doubt that the 1.1-percent jump in retail sales volumes in April is a sign that the consumer is roaring back to life," said Howard Archer at IHS Global Insight.

"Rather, what it suggests is that pressurised consumers need a particularly favourable set of circumstances to part with their cash ... we suspect that consumers are likely to keep a tight grip on their purse strings over the coming months."

Hetal Mehta, an economist at Daiwa Capital Markets Europe, agreed that Britons were still facing economic headwinds.

"The better-than-expected retail sales figures have been distorted by the unseasonably warm weather and the royal wedding, so we would certainly not get carried away with one month's numbers," Mehta said.

"With the labour market still weak, household debt remaining high and real incomes falling, growth in the consumer sector of this scale cannot be sustainable."

The British economy flatlined over the past six months, official data showed, reflecting the impact of deep government spending cuts and tax hikes.

© 2011 AFP

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