- Rain Newton-Smith, the CBI's director of economics
UK retail sales growth soared in May, while the expectations for the next month's sales hit the highest level in almost 27 years. The Confederation of British Industry's retail sales balance surged to +51 in the current month, far overshooting economists' expectations for +17, and compared with +12 in April. The indicator of expected sales for June jumped to +58, the highest level since September 1988, and up from +40 in May. The survey showed the volume of orders expected to be placed with suppliers next month increased to its highest since September 1996. According to the latest official data, UK retail sales, both including and excluding fuel, rose more than expected in the beginning of the second quarter as sales in clothing and footwear reached the highest level in four years.
Quarterly data also published by the CBI indicated that retailers' overall assessment of the business situation improved to +20, the highest mark since last August, up from +11 in February. CBI also expected British inflation to remain below 1.0% for the rest of the year. The official consumer price index dropped by 0.1% in the year to April 2015, for the first time since 1960. Yet, a steady growth in the retail sector suggests consumers in the UK do not tend to postpone major purchases due to expectations that prices will continue to decline further in the future – a phenomenon called a deflationary spiral.
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