UK Retail Sales Numbers Sharply Higher
The Bank of England has just published the minutes of last months Monetary Policy Committee meeting where the group decided to leave the base interest rate unchanged. As anticipated the vote was unanimous with all nine of the committee voting in favour of maintaining the status quo.
Also published this morning was the UK’s important April Retail Sales data. The headline year on year number was once again higher at 6.9%, up from the previous month’s 4.2% growth reading, market consensus was for an increase of 5.2%. Month on month this number rose 1.3%, this represents an increase on the March reading of 0.5%, consensus estimates were for this number to remain at the 0.5% level this month. Excluding Fuel the year on year Retail Sales number rose to 7.7% in April from 4.9% in March, beating a consensus estimate of 5.3%. Month on month the Ex Fuel number also rose to 1.8%, up significantly from the 0.1% exhibited the previous month and coming in well ahead of the 0.5% consensus estimate.
The elevated Retail Sales data is further evidence that the UK’s recovery is a heavily consumer lead one. Although manufacturing and domestic investment figures have also improved this month there is still concern around the heavy reliance on the retail sector. Increasing consumer demand is in turn leading to rising inflation figures, yesterday’s core Consumer Price Index came in at 2.0%, this is a forty basis point rise on the previous month and caught markets by surprise.
Today’s Bank of England minutes are from a meeting that took place before this surprise jump in inflation and as such did not directly address the matter. It is now however becoming more imperative that the monetary authorities take some action in order to cool and control the rate of growth within the UK economy, this will in all likelihood bring forward the start of the anticipated rate rising cycle to later this year.
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