UK: Retail sales estimate of May expected to be substantially lower again - Rabobank

UK’s high inflation rate may be a temporary result of the Brexit process, the ensuing decline in real wages could depress the UK economy and Bas van Geffen, Quantitative Analyst at Rabobank suggests that the estimate of May retail sales is therefore expected to be substantially lower again.

Key Quotes

“Indeed, the household savings ratio has touched a low point in Q4 (a mere 3.3%!), and if wages do not keep up with the costs of consumption, households may be forced to dis-save, until they ultimately have to start cutting expenditures.  This corresponds with the weaker trend in official retail sales data that has been evident since December. Although some respite was offered by a better than expected retail sales release in April, this was influenced by good weather which is likely to be temporary. Today’s estimate of May retail sales is therefore expected to be substantially lower again.”