Shoppers in the UK have been buying more than expected, particularly when it comes to clothes and shoes, with retail sales increasing 0.1 per cent in March and 4.2 per cent year-on-year.
Month-on-month, that’s down from the 1.3 per cent increase seen in February (which was revised down from 1.7 per cent), but well ahead of the 0.4 per cent drop that analysts were expecting.
The 4.2 per cent year-on-year rise was again ahead of the 3.8 per cent increase expected and the 3.3 per cent rise seen in February (revised from 3.7 per cent).
Non-food stores saw the highest year-on-year increase (9.6 per cent) since April 2002, said the Office for National Statistics. This reflects the negative effects of last year’s March compared to the warm one we’ve seen this year. There's a chance this could be reversed as the year progresses, though.
Food sales dropped sharply again last month, and the price of fuel fell 5.8 per cent - leading the 0.5 per cent deflation of average prices of goods.
Nonetheless, retailers should be heartened by the latest figures, says Keith Richardson, managing director of the Retail Sector at Lloyds Bank Commercial Banking - they point to customers' willingness to keep spending.
The amount spent in March increased 3.9 per cent from a year earlier. There was also a marked 7.1 per cent jump in how much was spent online from a year earlier, up 1.4 per cent when compared to February.
Capital Economics says there is a concern that consumers will be able to maintain the strong spending growth that's been seen, particularly given that real wages have only just begun growing again and savings remain low.
That said, inflation should "fall further and stay low" and, as wage growth picks up further, "the consumer recovery should receive more fundamental support over the coming quarters."
Sales rose by a solid 0.8 per cent in the first quarter, from 0.6 per cent at the end of last year, which, says Capital Economics, points to a speeding up in both overall household spending growth and GDP growth.
The Confederation of British Industry yesterday released its survey of British retail sales, saying the balance jumped to a robust 30 in April, from 13 in March. Economists had forecast a reading of 17.