HIGH street spending in Scotland is likely to remain subdued after spring sunshine and rising wage packets failed to get tills ringing last month.
Key figures published today reveal that total sales fell by almost 3 per cent in April, compared with a year earlier when they had increased by 1.9 per cent. Even after adjusting for food deflation, overall takings were down by 1 per cent last month.
Industry leaders described the performance as “pallid” and said upcoming political decisions would play a key role in dictating consumer confidence.
The latest readings from the Scottish Retail Consortium (SRC) and KPMG were further distorted by the early timing of Easter this year but there were some positives including a “stand-out” performance for clothing sales, experts added.
The report comes just a day after it emerged that UK inflation had turned negative for the first time in more than half a century. Economists said the reading of minus 0.1 per cent for April’s Consumer Prices Index (CPI) was likely to be short lived but could provide a multi-billion-pound boost to consumer expenditure.
David Lonsdale, director of the SRC, said: “Retail sales in Scotland dipped by 1 per cent last month, once falling shop prices are taken into account. This pallid performance however needs to be seen in the context of solid growth in the comparable period last year, and also the fact that trading over the important Easter period fell within the previous month’s data.”
He added: “Whilst pay rises across the economy are forecast to continue to outstrip inflation, the fact is that shoppers remain cautious and retail sales remain lacklustre.
“This brings into sharp focus big upcoming decisions which will affect disposable incomes and take home pay, notably the setting of the new Scottish rate of income tax and the proposed replacement of council tax.
“Greater certainty is needed over how the amount of money in people’s pockets and indeed consumer spending more widely will be affected by these changes.”
From April next year there will be a Scottish rate of income tax, which will see the UK Treasury deduct 10p from standard and upper rates of income tax in Scotland and give MSPs the power to decide how to raise cash.
Holyrood is also due to get more powers over income tax as a result of the changes proposed by the Smith Commission on devolution, which the new Conservative government has pledged to implement.
Commenting on the latest sales figures, David McCorquodale, head of retail at KPMG, said: “Spring fashions and April sunshine have helped boost Scottish sales.
“Although the figures are negatively distorted by the timing of Easter, an assessment of the quarterly figures to April, adjusted for the effect of online, show that the 0.7 per cent growth in Scottish non-food sales has been driven by the fashion and footwear categories. Despite plenty of April showers, some with snow, the sunniest April for 70 years helped get spring/summer fashions off to a good start which helped build momentum and, hopefully, margins.”
While he said sales in Scotland would not benefit from major events this year such as the Commonwealth Games and the Ryder Cup, he added: “This quarter’s figures give some encouragement for a sustained recovery in the fortunes of retailers north of the Border.”