'Today's data doesn't change the underlying story, where the squeeze in household incomes is starting to weigh on consumer activity.' - James Smith, ING Bank NV
UK retail sales rebounded markedly last month despite the post-Brexit sharp fall in the value of the Pound. The Office for National Statistics reported on Thursday that retail sales surged 2.3% in April, following the preceding month's upwardly revised fall of 1.4% and topping expectations for a 1.2% increase. The unexpected climb suggested that consumer spending also rebounded in April and would support economic growth in the second quarter. Last month's gain was mainly driven by the good weather that boosted demand for hardware and household goods. In volume terms, sales advanced 4.0% on an annual basis in April, compared to the prior month's increase of 2.0%. Meanwhile, market analysts expected sales volumes to rise 2.1% in the reported month. After the release, the Sterling rose above $1.30 for the first time since September 2016 and hit $1.3028 for a short time. Excluding automobiles, sales rose 2% on a monthly basis in April. Despite April's stronger than expected performance, retail sales are set to drop again in the upcoming months due to surging inflation.