Higher prices push consumers to stay at home

Sterling ended the week firmer on Friday with the currency benefitting from a better than expected Retail Sales data release. According to the data released by the Office for National Statistics, UK Retail Sales defied market expectations of a -0.2% contraction, instead growing to 1.4% in April from 1.2% in March. The data suggests the rise in retail sales for April was mainly driven by an increase in supermarket sales which were led by tobacco, alcohol and sweet treats. The data potentially implies that many are opting to staying at home as opposed to eating and drinking out.

Whilst the Retail sales data is largely positive, some economists have warned that the impact of recent National Insurance tax hikes and higher energy costs are not reflecting yet, with May’s release likely to give a better indication on consumers disposable incomes.

Friday also saw the release of GFK UK consumer confidence data. Figures showed consumer confidence fell to -40, its lowest level since 1974 as inflation reached a forty-year high in April. These figures aren’t good news for the British economy – consumer confidence has closely tracked GDP in previous decades, thus giving us a reliable signal that a recession could be on the cards for the UK.

Key announcements

16:15 – GBP – Bank of England Governor Bailey’s speech