Alcohol and tobacco sales boost retailers in April despite price hikes

Sales of alcohol, tobacco and summer clothes drove an increase for retailers last month, despite many being forced to hike their prices.

Customers flocked to supermarkets to buy more cigarettes and alcoholic drinks, but spent less in non-food shops.

The UK’s retail sector saw a 1.4% rise in sales over the month, after contracting in March, data from the Office for National Statistics (ONS) show.

“Retail sales picked up in April after last month’s fall.

“However, these figures still show a continued longer term downward trend,” said Heather Bovill, deputy director for surveys and economic indicators.

“April’s rise was driven by an increase in supermarket sales, led by alcohol and tobacco and sweet treats, with off-licences also reporting a boost, possibly due to people staying in more to save money.

“Clothing sales had a strong month, especially online, with some retailers suggesting consumers were purchasing clothes for summer holidays and weddings.

Retailers looking for some form of respite from today’s ONS figures will be disappointed; after years of turmoil from Brexit to Covid and now the Ukraine conflict, consumer confidence remains low and macroeconomic shocks like high inflation will continue to pile greater pressure on retail sales and margins

“The proportion of online sales crept up a little this month, but despite this increase have predominantly fallen since their peak in early 2021, although they remain well above pre-pandemic levels.”

The rise did not stop a 0.3% drop over the three months to April, but comes in the face of rising prices.

The most recent inflation figures showed a massive spike in the cost of living, especially in April as energy bills spiked.

Measured by the Consumer Prices Index (CPI), inflation hit 9% in the year to April.

David Baker, chief investment officer at consultancy Mazars, said that retailers who are being forced to pass on their increased costs to customers will be somewhat reassured by April’s figures.

“The reading contradicts recent consumer confidence data and suggests that near full employment and the ability of consumers to tap into savings accrued during the pandemic may be preventing shoppers becoming overly cautious despite the cost of living challenges associated with high levels of inflation,” he said.

But Ralph Robinson, head of retail at technology consultancy BJSS, said that April’s figures should not give false hope after the contraction over the last three months that data are available for.

“Retailers looking for some form of respite from today’s ONS figures will be disappointed; after years of turmoil from Brexit to Covid and now the Ukraine conflict, consumer confidence remains low and macroeconomic shocks like high inflation will continue to pile greater pressure on retail sales and margins,” he said.

Initial estimates that retail sales had fallen 1.4% in March were on Friday revised to 1.2%.