Official figures have shown a significant decline in sales volumes in department stores, with a fall of 3.8% over the last month. The data was released by the Office for National Statistics (ONS), which also revealed that sales across the country stagnated over the course of March, with no growth observed since February. Rising prices in the UK’s retail sector were held to blame for many businesses suffering at the beginning of 2019. The ONS’ senior statistician, Heather Bovill, noted that despite gains by hardware stores, furniture shops, petrol stations and clothing stores, food sales have decreased along with activity in department stores, where retailers suggest high prices have affected trade.
In spite of this, analysis shows that sales volumes rose by 1.9% compared to the previous three months of 2019, a fact that supports the suggestion of a recovering UK economy. Another cause for optimism comes from the expectation that interest rates are likely to be cut, following a decline in inflation to its lowest levels of the previous two-and-a-half years in April. Although there are fewer indications that prices in general will fall, it appears that they will begin to rise at a slower pace.
Lisa Hooker of accounting firm PwC noted: “Lower inflation and the first 2% cut to National Insurance which was felt in January’s pay packets has yet to translate into a sustained recovery in spending.” However, Alex Kerr, assistant economist at Capital Economics, argued that the UK was heading for a boost to spending throughout 2019, thanks to prospect of interest rate cuts and real household incomes, which have been boosted by falling inflation and 2p cuts to national insurance in April.
The Bank of England is set to meet on the 9th of May to discuss rates against the backdrop economic growth and retail figures, although analysts do not expect rate cuts to be enacted before June at the earliest. Meanwhile, despite a growing trend of “treasure hunt” shopping patterns, in which consumers go shopping for deals and bargains rather than specific items, retailers are being encouraged to combine e-commerce strategies with a physical presence in order to be successful
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