U.K. Retail Sales Fall Less Than Expected

Source: Daily FX

U.K. April retail sales fell 0.2% equaling the revised drop from the month prior, but better than the 0.4% decline predicted by economists. Annualized sales fell to 4.2% as expected from an upwardly revised 4.7% in March. Food retailers led the fall as sales declined 1% in April following a 0.9% drop the month prior. Clothing sales were flat as Britons continue to show that their appetite for shopping has some life. Consumers have seen their purchasing power diminished by rising inflation due to record energy and food costs. The better than expected results will give policy makers some relief, as they have signaled that inflationary pressures will prevent then from cutting rates in the near-term. Oil’s reaching above $135 a barrel may keep rates unchanged for the remainder of the year, as Governor King was already expecting inflation to remain above the central bank’s 3% threshold for several quarters. Growth forecasts for the country have been revised to 1% from 3% the year prior, as the housing slump continue to weigh on the economy, putting the MPC in a precarious situation.