UK retail sales jump, but big picture bleak

LONDON, May 22 (Reuters): British retail sales jumped unexpectedly in April as shoppers loaded up on alcohol and tobacco, likely a blip in an otherwise bleak trend that has driven consumer confidence to all-time lows amid a worsening cost-of-living crunch.

Retail sales volumes rose 1.4 per cent month on month after a 1.2 per cent drop in March, the Office for National Statistics said. Economists polled by Reuters had expected a 0.2 per cent monthly fall.

The wider picture remains disconcerting. Retail sales in the three months to April fell 0.3 per cent, after a 0.7 per cent drop in March. Compared with a year ago, sales volumes were 4.9 per cent lower, marking the biggest annual drop since January 2021.

Earlier on Friday, Britain's longest-running gauge of consumer confidence, the GfK survey, fell to its lowest since records began in 1974.

British consumers were hit last month by a double whammy of surging household energy costs and higher taxes, and data published this week showed inflation hit a 40-year high of 9.0 per cent.

The Bank of England thinks inflation will climb above 10 per cent later this year. "So far, the conflicting signals coming from the data are consistent with our call that the UK will stagnate in Q2," said economists from Berenberg Bank.

Sterling was little changed against the dollar after the data.

The ONS said food store sales rose by 2.9 per cent in April, largely driven by strong sales of alcohol, tobacco and 'sweet treats'.