FOOTBALL-CRAZY Britons splashing out on new televisions ahead of the 2010 World Cup gave retail sales a much-needed boost in May. The healthy 0.6 per cent gain last month contradicted the surveys from the CBI and the British Retail Consortium (BRC), which pointed to much weaker growth in sales.
The Office of National Statistics (ONS) said sales of televisions had helped give retail sales a boost. Compared to May 2009, the seasonally-adjusted volume of retail sales rose 2.2 per cent last month. The value of retail sales jumped 4.4 per cent on the previous May.
However, April’s retail sales volumes were revised downwards to 0 per cent from an initial estimate of 0.3 per cent. The BRC?expects a similar revision to the May jump.
“May’s ONS sales figures are currently a bit higher than the BRC’s. But the ONS data has been significantly revised downwards for every month this year. We expect the same to happen to these,” warned Stephen Robertson, director-general of the BRC.
While economists welcomed the May boost, they all revealed concern about the outlook for retail sales in light of the upcoming fiscal squeeze set to be revealed in next week’s Budget.
Vicky Redwood, senior UK economist at Capital Economics, said: “With consumer incomes about to be hit by tax rises and cuts in public sector employment and wages, we doubt that this resilience will last. Indeed, the recent falls in consumer confidence are already ringing alarm bells. We still think that the consumer outlook remains pretty bleak.”
ING’S James Knightley agreed: “With significant fiscal austerity coming [upwards of £100bn over the next five years] this will create a massive headwind for growth and consumer spending in particular.”
He added: “Higher VAT is a threat, while gradual increases in private sector employment may be more than offset by declines in public sector employment.”