Retail sales rose by 1.4 per cent in April, year-on-year (non-seasonally adjusted), according to the Retail Economics Retail Sales Index. This reverses some of the decline seen in March when sales fell by 0.5 per cent. The three month rolling average, which provides a more accurate underlying trend, rose by 0.9 per cent. This is consistent with average levels for 2015 and suggests that consumers are shrugging off any fears over Brexit.Looking ahead, April’s figures give room for some optimism that weaker sales growth in March was the result of short-term and seasonal influences rather than a wider slowdown in spending. Nevertheless, growth of 1.4 per cent in April is far from spectacular and we warn that growth may struggle to gain traction in the coming months. Given the vote on the EU Referendum is just a few weeks away, we feel that consumer and retail spending is likely to weaken in May and June as consumer confidence dips further and households hold back on purchases. Consumer confidence has already started to weaken from the highs of Summer 2015. There is a strong relationship between consumer confidence and retail sales growth and we expect consumer confidence to falter further as anxiety grows over the outcome of the EU Referendum.
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