High street sales fall

High street sales fell 1.5 per cent in April on a year ago – for the second month running.

British Retail Consortium (BRC) data also show like-for-like sales for the last three months as a whole were down 0.6 per cent on a year ago.

Total sales grew one per cent in April.

Stephen Robertson, BRC director general, said: “This is the first time in three years we’ve had two months in a row of year-on-year falls in like-for-like sales, further evidence that hard-pressed customers are really watching the pounds.

"With higher fuel and utility bills eating away at people’s spare cash, they are concentrating on essentials like food. Despite heavy discounting, clothing and footwear were at their weakest for at least eight years and more expensive housing-related goods continue to struggle."

The BRC claims the sales falls have to be put into the context of Easter falling early this year and the snow and rain of April being compared with a hot sunny Easter last April, make, but underlying trade still remains tough.

The bad weather particularly hit food and clothing sales, which were at their weakest in eight years.

Like-for-like sales rose 2.4 per cent in April 2007 and 6.8 per cent in April 2006.

Helen Dickinson, head of retail at KPMG, said: "Another disappointing month for most of the nation's retailers - two consecutive months of like-for-like sales declines.

"All sectors, with the exception of food, homewares and toiletries, were in negative like-for-like territory for the month. The food sector picked up on the previous month's lacklustre performance and delivered strong performance.

"However, April showed a double digit decline for clothing and footwear - as these results only take us up to the Saturday of the bank holiday weekend, any pick up on the back of this year's fine bank holiday weather and its continuation into the last week will only be seen in May's results.

"However, it is doubtful that the fine weather will be sufficient to significantly boost consumer confidence in the current environment."

The housing slowdown hit sales of larger electricals, and DVD player sales were down, but sales of flat screen TVs, along with digital cameras and laptops, held up.

The release of the computer game Grand theft Auto IV, along with Wii Fit, boosted sales for leisure goods, along with DVD releases of The Golden Compass and I Am Legend. The new Jodi Picoult and Patricia Cornwell books, as well as Delia Smith’s How to Cheat at Cooking helped book sales.

Howard Archer, chief UK economist at Global Insight, said: "Going forward, we expect consumer spending will be seriously hit by the major headwinds which has seen confidence fall to a fifteen-and-a-half-year low.

"These headwinds include muted real disposable income growth, tight lending conditions, a substantially softer housing market, lower equity prices and increased debt levels.

"Furthermore, elevated concerns about the economic outlook are likely to cause consumers to tighten their belts. Finally, we suspect that unemployment will start to rise later in 2008. Likely further gradual Bank of England interest rate reductions will help the consumer, but will only partially offset these major headwinds."

Daniel Barnes