An index of U.K. retail sales rose to its highest level in more than a year in May, rebounding after wet weather damped demand the previous month, the Confederation of British Industry said.
The gauge of annual sales growth jumped to 21, the highest reading since April 2011, from minus 6 the previous month, the London-based business lobby said in a report today. The measure of expected sales for June was at 25, indicating retailers expect faster expansion, the CBI said.
Official data showed retail sales dropped the most in more than two years in April as record rainfall reduced demand for clothing and fuel sales plunged. Any recovery in consumer spending may be kept in check as inflation continues to outpace wage growth, squeezing Britons’ finances. The CBI said today that retail-price inflation accelerated over the past quarter and will remain “elevated” in June.
“It’s encouraging to see high-street sales up,” said Judith McKenna, chief operating officer of Wal-Mart Stores Inc. (WMT:US)’s Asda unit and head of the CBI’s distributive trades panel. However, “the combination of high unemployment, slow wage growth and weak consumer confidence means that the retail sector is likely to remain under pressure in the short term.”
A separate quarterly index showed the rate of selling-price inflation rose to 54 this month from 49 in February and a quarterly measure of retailers’ business situation gained 15 points to 3.
Within the monthly CBI survey, the gauge of orders placed on suppliers climbed to 7 in May from minus 7 in April and the volume of stocks surged to 23 from 5. Overall retail sales were still below their average for the time of year in May, the lobby group said. The survey of 67 retailers was conducted between April 26 and May 16.
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