(MENAFN– ecpulse) U.K. retail sales surged for a third straight month in April to add to evidence the British economy would continue its strong growth pace in the second quarter.
The reading including auto fuel showed 1.3 percent advance after rising 0.5 percent in March, compared with analysts’ forecast of 0.4 percent rise. On the year, the reading soared 6.9 percent from a revised of 4.8 percent gain.
Excluding auto fuel, retail sales edged up 1.8 percent, compared to forecast of a 0.5 percent gain, from a revised of 0.1 percent gain. The annual reading signaled 7.7 percent surge from a revised of 4.9 percent.
The rise was buoyed by the soar in food sales by 3.6 percent, where sales of clothing, household goods and spending at department stores all jumped on the monthly basis.
It seems that retail sales are taking advantage of the improvement in unemployment and drop in inflation.
U.K. ILO unemployment for the three months through March retreated to 6.8 percent from 6.9 percent, where the number of job seekers bucked by 133,000 to 2.21 million.
CPI for the year ended April rose to 1.8%, from 1.6% in March, the lowest since October 2009.
The recent data from the U.K. has suggested the economy is moving on the right track towards recovery.
The BOE expects 0.9 percent expansion this quarter, as gradual improvement in productivity and real incomes along with “growing confidence of companies to invest, should underpin the durability of the expansion.”
BOE mentioned that the slack in the British economy is narrowing, but policymakers estimate is “cautious,” where volatility may rise as economies normalize.
As of 08:50 GMT, the pound traded higher versus the U.S. dollar around 1.6904 after setting a peak of 1.6919.
BOE Minutes
Bank of England Minutes for May’s monetary decision showed that policymakers were unanimous to holding both interest rate at 0.50 percent and amount of asset purchases at 375 billion pounds.
The minutes illustrated that the policy decision was becoming “more balanced” for some of the nine-panel members, yet they all agreed that the economy still needs time to reduce slack before raising interest rates.
The split among MPC members appeared regarding the amount of spare capacity in the economy, which has become a key determinant to raising borrowing cost.
MPC members mentioned that the current low interest rate would remain unchanged for some time, where it would soar thereafter in a gradual manner.
Policymakers aim to tackle the key threats stemming from the rise in house prices, while they have many options to deal with the slack in labor market and in companies.
Recovery looks “less fragile” and threats from global markets are “benign,” the minutes said.
Still, the appreciation of the sterling is one of the main threats to recovery as while it may put downside pressure on inflation it will probably have some negative effects on the economy.
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