Belfast Telegraph

Saturday 19 April 2014

Discounts help boost retail sales

Heavy discounting and promotions at department stores helped pull in cash-strapped consumers and push up retail sales last month, official figures have shown.

Retail sales volumes increased 1.4% in May, following a revised 2.4% drop in April, the Office for National Statistics (ONS) said. City analysts had expected a rise of around 0.8%.

The increase was driven primarily by a 6.2% surge in fuel sales, as March's fuel strike threat continued to have an impact, but there was evidence that a fall in prices at department stores also lifted volumes. Stripping out the impact of fuel, total retail sales volumes increased by 0.9%.

The rate of inflation has fallen back throughout 2012, from a 5.2% peak last September to 2.8% in May, as weak economic growth has weighed on company's pricing power.

Sales plunged in April as heavy rain hit clothing and footwear retailers.

A bright spell of sunshine later in May had a small impact on the clothing sector, the ONS said, which rebounded after a dismal April to record 3.4% growth in sales volumes.

Non-specialised stores - or department stores, such as John Lewis and House of Fraser - saw volume growth of 0.8% on the month and 11.3% when compared with May last year.

The ONS estimates that the price of goods in department stores on average have fallen 2% in the last 12 months.

Discounting and promotions were also seen in so-called other stores, a broad category including computers, books and newspapers and toiletries.

Food sales had a weak month, growing just 0.2%, but the survey period ended on May 26 and did not include the final run-up to the Queen's Diamond Jubilee, which is expected to boost sales in June's survey.

Consumers spent £26.4bn in May compared with £26bn in April.

Alan Clarke, economist at Scotiabank, said: "The trend in consumer spending should be improving as the burden from non-discretionary spending, that is food and energy, continues to ease, which makes more room for faster discretionary spending."