UK DATA PREVIEW: UK Sales Gains Seen Extending in March

By Shaily Mittal

     LONDON (MNI) - Gains in UK Retail Sales Seen to Extend in March

     -UK Retail Sales incl fuel M/M, Bbg cons -0.3%, MNI Median -0.3% vs Feb

0.4%.

     -UK Retail Sales incl fuel Y/Y, Bbg cons 4.5%, MNI Median 4.5% vs Feb 4.0%.

     UK annual retail sales are expected to pick-up further in March after a

surprise rise in February. Consumers retained their nerve in February despite

the uncertainty about Brexit, leading to a rise in sales of 0.4% on the month.

The increase came despite a 1.2% fall in food sales, which constitute over a

third of total retail sales by volume.

     Resilient consumer spending is poised to lift Q1 GDP: After rising by 0.9%

in January, sales volumes could fall by as much 2.9% in March and still leave Q1

retailing on par with Q4. Sales have not fallen by such a magnitude since

January 2010.

     Mostly Negative Surprises in March: Since 2010, there have been seven

downside surprises and two upside surprises in March. With an average negative

surprise of 0.8pp for March, a negative surprise is possible, given recent weak

survey evidence.

     Price Rise in Food Sector: In February, the price deflator rose 0.5% on the

year compared with 0.3% in January. The rise was primarily led by the Food

sector, which faced the highest price rise in five months. Retailers in the

Non-Food sector continued to offer price cuts, with the Textile and Footwear

sector leading the way. The Textile and Footwear sector has seen the most

aggressive price cuts, with the deflator turning increasingly negative over the

last six months, the longest stretch of weakness since mid-2016.

     BRC-KPMG Retail Sales Moderate Further in March: The BRC-KPMG survey showed

total sales decreased by 0.5% in March vs an increase of 2.3% in the same period

a year earlier. This was below the respective three-month and 12-month averages

of 0.6% and 0.9%. Even after correcting for Easter distortions caused by its

timing in April this year compared with March last year, the slowdown in the

retail industry remained at large. Consumers were comfortable spending on

clothing and footwear but cautious regarding higher-value items.

     VISA Household Spending Falls Further: Overall VISA spending fell 0.2% on

the year in March, the sixth consecutive decline. There was a small fall in

Face-to-Face spending, but eCommerce spending rose by 0.5% after declining 1.1%

in February.

--MNI London Bureau; tel: +44 203-586-2224; email: shaily.mittal@mni-indicators.com