Retail sales are “bounding ahead”, with growth accelerating strongly in the year to May, the CBI has said.
The employers’ organisation said growth in the volume of retail sales and orders exceeded expectations.
Sixty percent of firms said volumes were up on a year ago, while 9% said they were down, giving a positive balance of 51%.
And expectations for the year to June were even more optimistic, its survey of 134 businesses found.
“Low inflation, which we expect to remain below 1% for the rest of the year, has given household incomes a much-needed boost and greater spending power,” said Rain Newton-Smith, the CBI’s director of economics.
“Overall, the outlook is bright for firms on the High Street, but challenges still remain, especially for food retailers, who are still feeling the heat of stiff price competition from new entrants to the sector.
“And investment plans have also taken a hit.”
Retailers expect sales volumes to grow again in the year to June, with 63% expecting them to rise and 4% to fall, the CBI said.
Last week, figures from the Office for National Statistics showed that UK retail sales rose by 1.2% in April, the strongest increase since November, after the warm weather encouraged shoppers to buy summer clothes.
Howard Archer, chief UK and European economist at IHS Global Insight, called the CBI’s latest findings “a cracking survey” and said it indicated the pace of growth in the UK economy was accelerating.
“It is looking increasingly likely that robust consumer spending will help the UK economy regain momentum in the second quarter after GDP growth moderated to just 0.3% quarter-on-quarter in the first quarter.
“We currently forecast second-quarter GDP growth to improve to 0.7% quarter-on-quarter.”
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.