Soaring UK Retail Sales Defy Headwinds in Boost for Reeves

njk[j3v)1sqwwo]c(}c24qz)_media_dl_1.png UK Office for National Statistic

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(Bloomberg) — UK retail sales soared in April, continuing a surprisingly strong start to the year and offering hope that the economy can defy headwinds from tax hikes, rising household bill and US President Donald Trump’s global tariff war.

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The volume of goods sold online and in stores increased 1.2% on the month, the Office for National Statistics said Friday. It marked the fourth consecutive monthly rise and followed the best quarter for British retailers since 2021. Economists were expecting a 0.3% increase.

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April was the sunniest month on record in the UK with pleasant weather across the country. “Sunny skies and warm temperatures helped boost retail sales,” said ONS senior statistician Hannah Finselbach. Food and alcohol were among the categories that saw an increase in sales, yet some economists said retail sales are likely to drop off when the morale lift from the sunshine fades.

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Still, the numbers are a boon for Chancellor of the Exchequer Rachel Reeves who is relying on strong economic growth to keep her spending plans on track and avoid the need for more tax hikes. The UK started the year with fears of a technical recession, but has so far exceeded expectations, recording 0.7% annual growth in the three months to March — its best quarter in over a year.

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Reeves’ £26 billion ($35 billion) increase in national insurance contributions — a payroll tax — came into effect in April and was expected to dampen sentiment. Households also experienced a jump in water bills, train fares and local authority taxes as a wide range of basic costs went up in what British media dubbed “awful April.”

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The month started with President Trump unveiling a round of sweeping global tariffs, which the Bank of England expects to hit the UK’s growth prospects. Despite striking a trade deal with the US, Britain remains exposed to darkening global headwinds as an open economy. S&P’s recent PMI survey revealed British exporters are already experiencing a dry up in demand from overseas.

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Nonetheless, retail sales in the three months to April were up 2.8% compared with the same period last year, the strongest increase since March 2022.

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What Bloomberg Economics Says…

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“The behavior of consumers over the next 6-9 months will have an enormous bearing on how the economy performs in the face of higher US tariffs and how quickly the Bank of England cuts interest rates.”

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— Dan Hanson, chief UK economist. Read the full report here.

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On the positive side for consumer spending, sentiment has been supported by a recent string of positive developments. Living standards expanded in the first quarter, rebounding after two consecutive quarterly falls, interest rates are coming down and workers are still enjoying healthy wage gains.