UK High Street sales down again

UK retail sales have fallen for the second consecutive month, official figures have shown, the first time this has happened for more than two years.

Sales fell by 0.2% last month, the Office for National Statistics has said, following March's 0.4% decline.

However, April's fall was less than had been forecast, suggesting the feared High Street slowdown is not yet as severe as many experts have predicted.

Food and household goods sales were weak but computer games performed well.

Mixed picture

On a three-monthly basis, retail sales growth slowed to 1.5% between February and April, down from 1.9% in the January to March period.

On an annual basis, sales growth is now down to 4.2% from 4.7%.

The 0.2% fall in April's sales was better than market expectations of a 0.5% monthly decline. The data also showed a marked difference in the performance of food and general retailers.

"We suspect that consumers' resilience will be increasingly eroded over the coming months"
Howard Archer, Global Insight

Sales at food stores fell 1% in April, affected by the sharp rise in the price of global food commodities in recent months.

In contrast, sales at for non-food stores increased by 0.2%.

In particular, computer games retailers were boosted by the release of the new version of the hit game Grand Theft Auto 4.

Conditions have worsened on the High Street in the past six months with a number of store chains such as Ethel Austin and MK One going into administration.

Caution

The credit squeeze and falls in house prices in most parts of the country have made consumers far more cautious.

Retailers have called on the Bank of England to cut interest rates further to put more money in consumers' pockets, but this looks unlikely with inflationary pressures persisting.

"Taken at face value, the retail sales data suggest that the consumer is only gradually and reluctantly reining in his spending despite facing serious headwinds," said Howard Archer, chief economist at Global Insight.

"Nevertheless, we suspect that consumers' resilience will be increasingly eroded by these headwinds over the coming months."

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