7 May 2024
If you are covering the latest news in financial markets, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“After a particularly wet Bank Holiday Monday, UK retailers will today likely be unsurprised by data out from the British Retail Consortium which showed sales on a like-for-like basis declined 4.4% in April, versus a gain of 3.2% in March. Taking the two months together, sales rose just 0.2% compared with the equivalent period in 2023. The weak performance in April has been blamed on both the Easter weekend falling earlier, with the impact on retail sales coming in the March data instead, as well as high levels of rainfall over the period. Weather data from the Met Office shows that rainfall in the past three months has been at 151% of long-term averages, compared to 110% for the same period in 2023. However, there are signs of life in the UK economy, with some measures of consumer confidence indicating that consumers are feeling less negative than they were amidst signs of lower inflation and the potential for interest rate cuts in the months ahead.
“On the interest rate front, with the Bank of England’s Monetary Policy Committee due to meet on Thursday, where the focus will be on the inflation outlook, markets are pricing in a high probability of the first rate cut happening at the August meeting. A split in the Committee has seemingly appeared in recent weeks, as Chief Economist Huw Pill has said there’s still a “reasonable way to go” before he’s confident that inflationary pressures have subsided even as Governor Andrew Bailey has said that inflation is moving in the right direction and interest rates cuts are in play.
“Early signs of a little life in the UK economy, which will be watched for closely in GDP data released on Friday, combined with an expected further drop in headline CPI later this month, should lay the groundwork for base rate cuts by the end of the summer, gradually easing the pressure on consumers as we move through the year.”
