After witnessing a slump in the previous month, retail sales in the UK grew by 1.9% year-on-year in May 2008 due to warm weather conditions and rising consumer confidence.

The UK retail sales increased like-for-like by 1.9% in May 2008 against the corresponding month last year, after recording a 1.5% drop in April 2008, revealed the British Retail Consortium (BRC), as reported by Reuters.

BRC called this the ‘strongest reading’ since January 2008 and one among the few pieces of data that projects a bright picture of the British economy in past some weeks. The overall retail sales in Britain registered 1.6% YOY drop in March this year, followed by a 1.5% decline in April 2008.

The primary driver of the retail sales in the UK this season (May 2008) is attributed to the warm sunny weather, which spurred retail sales in the summer wardrobe category. Also, within the summer wardrobe retail sales, cotton fabric is posting huge sales owing to the warm weather.

Additionally, strengthening consumer confidence in the UK with more consumers showing an inclination towards the latest fashion trends and appreciation of quality products proved a major force in fuelling the retail sales. Moreover, the improving purchasing power, coupled with rising education and awareness level, is pushing consumers towards spending on high-quality products. Hence, the growing demand for branded products in the retail industry is encouraging manufacturers to produce more brand items.

However, the Bank of England as well as the government is forecasting the British economy to slowdown in 2008. This may result in erosion of consumer confidence in coming months and could adversely hamper the retail sales in the UK.

According to a Research Analyst at RNCOS, “The UK retail sales are going up because of the positive and favorable business conditions. Phenomenal growth in the UK’s retail industry is turning out to be a lucrative opportunity for foreign players to invest their money. Thus, the rising volume of FDI and FII would be crucial in pushing up the British economy. However, the UK’s retail sales could witness a further rise through intensive brand marketing and sales promotions of retail products.”

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