UK retail sales fell sharply in April

British retail sales fell by 1.3% in April, in the biggest monthly drop in one year, after 0.6% expansion in March and disappointing expectations for decline by 0.6%.

Sharp fall in fuel sales (the largest monthly fall since the Covid pandemic) made the biggest contribution to downbeat April numbers, reflecting growing negative impact from rising energy prices on persistent uncertainty over the situation in the Middle East.

Core retail sales, excluding fuel, were down by 1.1% in April m/m, vs 0.1% rise previous month and fell slightly below -0.3% consensus.

Fuel sales fell by more than 10%, while the other sales, except food, registered significant drop in April, mainly driven by weakening consumer confidence, weighed by growing concerns around the impact of the Iran conflict on the cost of living, higher mortgage costs and persistent pressure on household finances.

Separate survey showed slight rise in consumer confidence in May, as indicator ticked up from April’s figure (the lowest since October 2023), though remaining deeply in the negative territory that continues to darken the outlook.

Another report released on Friday showed higher than expected government borrowing in April, which was 25% higher than in April last year at 24.3 billion pounds (from 11.9 billion previous month and well above 20.7 billion consensus), the second-highest borrowing for April on record and reflecting growing pressure on FinMin Reevs.