May 24, 2018 / 9:18 AM / in 25 days

UPDATE 1-UK consumers return to shops after snowy start to 2018

    * UK retail sales +1.6 pct m/m vs f'cast +0.7 pct
    * Strongest m/m growth since October 2016
    * Sterling jumps, gilts fall
    * Big picture for retail sales remains subdued - ONS

 (Adds market reaction, details)
    By William Schomberg and Alistair Smout
    LONDON, May 24 (Reuters) - British retail sales jumped last
month by the most in one-and-a-half years, official figures
showed on Thursday, suggesting the  economy was recovering from
a snowy start to the year.
    The Bank of England is waiting for signs of recovery before
it raises interest rates again and sterling was up by half a
percent on day against the U.S. dollar after the
stronger-than-expected sales figures.
    On Wednesday, the pound hit its lowest level of 2018 against
the dollar after inflation unexpectedly fell, raising fresh
doubts about the timing of the BoE's next rate hike. 
    Retail sales volumes rose by 1.6 percent from March, the
Office for National Statistics said, well above the median
forecast for a monthly 0.7 percent increase in a Reuters poll of
economists.
    The ONS said warm weather in April brought consumers back
into the shops. But it warned that the big picture remained one
of subdued spending with sales broadly unchanged over the past
six months.  
    Peter Dixon, an economist with Commerzbank, said the figures
were a rare piece of positive news about the economy after the
weak start to 2018, although the sales data tends to be
volatile.
    "These figures show the consumer is not dead and they keep
the Bank of England on its toes," Dixon said. "This is grist for
the mill for those think a rate rise is justified sooner rather
than later."
    April's sales pick-up followed a sharp fall of 1.1 percent
in March when Britain was still in the grip of unusually cold
winter weather.
    In the three months to April, sales edged up by 0.1 percent
compared with a fall of 0.4 percent in the three months to
March, the biggest decline in a year.  
    British households were hit last year by a combination of
rising inflation and weak wage growth. Recent figures have shown
a cooling of price growth and a pickup in wages. 
    But many retailers are struggling as consumers remain wary
about spending and online shopping upends the industry.
    Marks & Spencer        , House of Fraser and New Look among
other chains have said they plan to close shops. But clothing
retailer Next         said earlier this month that warmer
weather in April boosted its sales. 
    Figures on Wednesday from the Confederation of British
Industry showed retail sales picked up moderately in
May.              
    A gauge of inflation used in the retail sales data picked up
to 2.2 percent after sinking in March to its lowest since
January 2017 at 1.9 percent.
    The ONS said retail sales in cash terms grew by 3.5 percent
in April in annual terms, up from 3.2 percent in March.

 (Writing by William Schomberg
Editing by Keith Weir)
  
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