The Retail Note - Retail sales: a yoyo rather than a no-no

Key Messages

• No discernible slowdown in retail sales
• April YoY retail sales values +4.0%, volumes +1.1%
• Headline MoM volume decline of -1.3% over-reported
• MoM values ahead slightly by +0.1%
• YoY grocery spend +3.0%, volumes -0.4%
• Grocery inflation surprisingly declines from +3.7% to +3.4%
• YoY non-food spend +3.8%, volumes +2.0%
• Strong month for Charity Shops, Cosmetics, Jewellers, DIY, Garden Centres
• Soft demand for Chemists, Footwear, Sports, Textiles
• Online sales -2.3% MoM, +6.6% YoY
• Online penetration declines by -60bps to 28.1%
• Inflation in automotive fuel running at +20%
• Sobering reminder of operating cost impacts for retailers
• Volume growth will come under pressure as the year unfolds
• A stronger May on the cards
• But don’t believe the hype around the World Cup as a driver of demand.

A sense of foreboding or just a classic case of déjà vu? The retail sales figures from March were strong, those from April were always going to appear weak in comparison. Just as night will follow day, such is the perpetual motion of retail sales if the folly of month-on-month comparison is perpetuated. A folly that is merely compounded through clumsy and unnecessary seasonal adjustment.

The true read

Year-on-year retail sales values (exc fuel) grew by +4.0% in April, a slight acceleration on the +3.9% recorded in March. Year-on-year retail sales volumes (exc fuel) increased +1.1%, a slight deceleration on the +1.5% reported last month. Not catastrophic, but a deceleration in volumes the shape of things to come for the rest of the year. It seems ironic that a +0.6% rise in Q1 GDP was celebrated as being one of the best in the G7, yet retail sales figures that far exceed this are readily dismissed, almost scorned.

It’s almost as if the war in the Middle East isn’t happening – but there are reminders in the retail sales figures that it certainly is. The ONS are happy to seasonally-adjust out inconveniences such as Christmas and Easter, yet even they don’t take it upon themselves to smooth over major global disturbances. 

According to the ONS: “Fuel volumes fell in April as some retailers suggested that motorists were conserving fuel. This followed strong March growth, with retailers reporting that motorists stocked up as prices rose”. Again, a distorted month-on-month view, the year-on-year one painting a far more telling picture. Fuel sales values increased +9.7% YoY, but volumes were down -10.0%. By implication, fuel inflation was a whopping +19.7%, a sobering reflection of the impact of the war in the Middle East and one that will weigh heavily on all industries, not just retail, for some time.

In a parallel universe given far too much airtime, the economist focus has been on the largely meaningless month-on-month volume figures, which showed a fall of -1.3% in April, after a rise of +0.6% in March. Total retail sales, excluding automotive fuel, fell by -0.4% MoM. The economist community took delight in the fact that the numbers at least fitted their narrative, even if they got it spectacularly wrong again (consensus -0.6% vs. actual -1.3%).

To be fair, the ONS did try to paint a more positive picture by majoring on a three-month-on-month picture: “The quantity of goods bought (volume) in retail sales is estimated to have risen by +0.5% in the three months to April 2026, compared with the three months to January 2026. Non-food stores’ sales volumes grew, with cosmetics and toiletries stores rising for their fourth consecutive month, and computer and telecoms retailers showing sustained performance following product releases in March 2026.”

But why not do the decent thing and report on YoY performance, as every single retailer the length and breadth of the land does?

Performance by sub-sector

Usual variation in performance by sub-sector, with a sprinkling of surprises.

Grocery sales grew +3.0% year-on-year, but volumes were down by -0.4%. This actually marked a slight improvement on the previous month (values +2.7%, volumes -1.0%). Perhaps more surprising was the direction of travel on inflation, which actually showed a deceleration from 3.7% to 3.4% in April. This puts all the political clamour for grocery retailers to impose price caps into sharp perspective – a ridiculous notion that shows neither understanding of nor regard for the cost and competitive dynamics of grocery retailing. I’ll leave the politics there, but believe me, I could go on…

A much more nuanced picture in non-food, as ever. All non-food retail values grew +3.8%, with volumes up by a very healthy +2.0%. Implied inflation doubled from +0.9% to +1.9%. Rather than a bad thing as many economists would interpret this as, this is actually a good barometer of robust underlying consumer demand. Despite rising prices, UK consumers still spent +3.8% more and bought +2.0% more largely discretionary goods last month. Much more meaning in those stats than silly month-on-month volume comparisons.

Last month saw a surge in demand for Second Hand Goods (largely charity shops), with values up +65.9% and volumes ahead +56.2%. A possible trading down reaction to global events? The other category to record blockbuster growth was PCs & Telecomms (values +39.2%, volumes +45.3%), but the rider here was that this was deflationary growth (-6.1%), effectively driven purely by discounting.

More measured but ‘better’ growth in a number of categories, both high street and out-of-town. In the former camp, another good month for Cosmetics (+15.3%, +13.1%), Jewellery (+6.6%, -3.5%) and to a certain degree Clothing (+3.4%, +1.7%). In the latter camp, DIY (+7.6%, +3.7%) and Garden Centres / Pet stores (+7.5%, +3.3%).

At the other end of the performance spectrum, demand was again soft for Chemists (-13.1%, -14.5%), Textiles (-11.8%, -12.7%), Footwear (-10.4%, -10.0%), Music & Video (-6.1%, -14.4%), Sports & Toys (-4.1%, -3.3%), and Carpets (-0.7%, -3.1%).

Online sales grew +6.6% year-on-year in April, but declined by -2.3% month-on-month. As overall retail sales values actually grew month-on-month by +0.1% (squirreled away on P.7 of the ONS release), online ‘underperformed’ the wider retail market last month. Accordingly, online penetration declined by -60bps from 28.7% in March to 28.1% in April, lower than where it was in February (28.2%). All swings and roundabouts.

For more detail, please refer to our accompanying Retail Sales Dashboard.

Where do we go from here?

Overall spending growth of +4.0% and ‘real’ growth of +1.1% hardly smack of a consumer meltdown, whatever any economist may say to the contrary. Retail sales values have been running at an average monthly growth rate of +4.6% in the first third of the year, with monthly average volumes at +2.7%. The latter will come under pressure as inflationary pressures rise, but even a tentative prediction for the year as a whole of value growth of 4-5% and volume growth of 0-1% do not seem ridiculous.

What may we expect shorter term? The ‘good month – bad month – good month’ pendulum or yoyo dictates that May’s figures will look strong. However, the seasonality of retailing can inflate April’s figures if Easter falls late. This year, it straddled two months – Good Friday falling into the March figures, Easter Monday into the April ones. We’re already three weeks down, but with the weather set fair for the Bank Holiday and rest of the month (hopefully), this should provide a timely boost to demand, particularly on the food side. The outturn for May should be decent.

And, of course, June brings with it the World Cup, which, in fact, runs well into July. Cue a massive, but somewhat misguided, expectation that global sporting events have a significant bearing on consumer shopping patterns. Spoiler alert: they don’t. And if anything, actually prove more of a distraction than a positive driver of demand. If needed, I’ll dust off previous analysis that reinforces this.

Or maybe the ONS will choose to seasonally-adjust the World Cup out the numbers anyway and save us all the bother.