Goods purchased rises to highest rate for nearly 10 years

Greater Manchester Chamber of Commerce

Commenting on today’s retail sales figures, Christian Spence, Head of Business Intelligence at Greater Manchester Chamber of Commerce, said: “Today's (21 May) data show a strongly recovering consumer economy with the amount of goods purchased in the retail sector rising at its highest rate for nearly 10 years.

"Weak inflation within the food sector has contributed to a fall in prices over the past year of 0.6% improving the purchasing power for households despite real wage growth having not yet appeared. The share of retail sales being purchased online continues to increase, rising by 13.3% to stand at 11% of all retail spending with internet sales from department stores rising at over 30%.

“We resist any commentary on this highlighting any form of an unbalanced recovery. With around two-thirds of the UK economy dependent on consumer spending, we would always expect to see a strong growth in this area before we see significant rises in business investment, as consumer spending is ultimately the source of business income, itself leading to greater investment by companies when they can see future demand looking strong.

“It is, however, difficult to see growth in consumer spending continue to rise at this rate whilst household disposable incomes remain constrained by a lack of real-terms pay increase. Inflation remains low, and we expect it to remain so for this year and next, and we still expect the data for the April pay round (published in June) to show stronger growth in employee compensation, finally moving pay growth into positive real-terms territory.”