Retail sales are “bounding ahead” as falling prices and a boost to consumer spending power gives retailers the most upbeat outlook for 27 years, according to new figures.
The latest survey from the Confederation of British Industry (CBI) came as a separate study showed the proportion of UK consumers willing to spend money had risen to its highest level on record, with confidence soaring to a nine-year high.
According to the CBI, 60 per cent of retailers saw sales rise in the year to May, with just nine per cent reporting a fall, giving a balance of 51 per cent - far greater than expected and the strongest reading since the Christmas sales boost in December last year.
And the poll revealed a balance of 58 per cent of retailers are expecting sales to rise again in the year to June, which is the best reading for 27 years.
The figures come after official retail sales figures last week showed April’s unseasonally warm weather, combined with lower prices, saw sales volumes jump by a bigger-than-expected 1.2 per cent last month, recovering from a surprise 0.7 per cent fall in March.
The CBI data suggests the buoyant conditions on the high street have continued despite the more unpredictable weather so far this month, with the survey of 134 firms - including 63 retailers - carried out between April 30 and May 15.
Consumer finances are being boosted by falling prices, with the UK now experiencing deflation for the first time since 1960 after inflation turned negative in April. Shoppers are benefiting at last from a welcome pick-up in real wage growth.
Rain Newton-Smith, CBI director of economics, said: “Retailers will be encouraged to see growth in sales and orders on the high street bounding ahead.
“Low inflation, which we expect to remain below one per cent for the rest of the year, has given household incomes a much-needed boost and greater spending power.”
The bumper May result follows a CBI survey reading of 12 last month. Howard Archer, chief European and UK economist at IHS Global Insight, cheered a “cracking” survey result.
He added: “It is looking increasingly likely that robust consumer spending will help the UK economy regain momentum in the second quarter after gross domestic product growth moderated to just 0.3 per cent quarter-on-quarter in the first quarter.”
Last week, Marks & Spencer reported its first increase in annual profits for four years, kick-started by strong fashion sales.
The firm said underlying profits were up by 6.1 per cent to £661.2 million in the first quarter of 2015, helped in part by the success of Rosie Huntington-Whiteley’s underwear range.
And in a sign of renewed enthusiasm for M&S fashion, a £199 suede skirt – worn by model Alexa Chung and New York socialite Olivia Palermo – sold out shortly after arriving in shops this month.
In Leeds, the £350m Trinity Leeds shopping centre has been hailed as a major success since opening in 2013, and the nearby Victoria Gate development is expected to create up to 1,000 construction and 1,000 retail and hospitality jobs.
It emerged this year that Victoria Gate is already 40 per cent let ahead of its opening next autumn as stores flock to grab a space next to one of the biggest John Lewis stores outside London.
In December, retail expert Mary Portas singled out Rotherham as a town that has turned itself around as she accused the government of making ‘token gestures’ to rejuvenate Britain’s struggling high streets.
A project designed to breathe life back into Rotherham’s shopping streets and restore some of the oldest buildings in the town centre back to their full glory began in 2011.
Miss Portas, known as the Queen of Shops, hailed Rotherham as a place where scores of people - volunteers and retailers small and big, council officials, market organisers and stall owners, community workers, landlords and developers - had “put their shoulders to the wheel and proved that doing something can make a difference.”
The proportion of consumers who believe the UK is in a recession is at its lowest point on record, while positivity about job prospects and personal finances are at their highest level for seven and half years, it was claimed today.
The UK Consumer Confidence Index hit 97 in the first quarter of this year, the highest since it reached 101 in the first quarter of 2006 when Tony Blair was in his third term as PM, the base interest rate was 4.5 per cent and Facebook first opened to the public.
It is derived from Nielsen’s Global Survey of Consumer Confidence and Spending Intentions, established in 2005 to measure consumer attitudes.
Consumer positivity about job prospects increased for the eighth consecutive quarter to 45 per cent, the highest level for seven and a half years, while the number of people who believe the UK is in a recession dropped for the eighth consecutive quarter to 51 per cent - the lowest level since the question first appeared in the survey in 2008.
The number of consumers who believe that now is a good time to make purchases rose three points to 45 per cent - the highest level since the question first appeared in the survey in the third quarter of 2006.
Meanwhile, 56% say they have changed spending habits to save money this quarter, the second lowest point on record.
Half (50%) feel positive about their personal finances, the highest level since the third quarter of 2007.
Nielsen UK managing director Steve Smith said: “Consumer confidence in the UK continues to rise.
“The UK is one of the fastest growing major economies, unemployment is falling and people are benefiting from zero inflation and lower prices in supermarkets and petrol stations.
“Whilst the majority of people are still cost-cutting - perhaps habitually now - wages, for others, are rising faster than household expenses. This is leading to more optimism about their future spending, so we expect to see confidence continue to rise in 2015.”