Strongest growth since 2006 keeps retailers bouncing and boosts sales

Sales surged by 6.6 per cent in March – the strongest growth since April 2006 – figures from the British Retail Consortium (BRC) and accountant KPMG showed. On a like-for-like basis, growth hit 4.4 per cent.

However, the inclusion of Good Friday and Easter Saturday in the March trading period significantly boosted the performance. The sales rise was only half as strong with the effect of Easter stripped out, implying underlying sales growth of around 2 per cent, as "pre-election uncertainty" continued to hit spending.

Helen Dickinson, head of retail at KPMG, said: "The timing of the majority of Easter spending, falling into the March 2010 period but in April last year, has boosted this month's figures and makes year-on-year comparisons difficult. Without this uplift a gloomier picture would have emerged. Concern about the future continues to weigh on consumers' minds."

Competition between supermarkets to attract cautious shoppers saw the "most intense" March for promotional activity in eight years, the BRC said. Food price inflation has slowed in recent weeks as retailers fight to get shoppers through the tills.

However, Dickinson added: "How long they will be able to sustain this, given the pressure on margins, is debatable."

Retail bellwethers Marks & Spencer and John Lewis have clocked up healthy sales of late.

The BRC data showed that same store sales rose across all sectors last month, with food and drink sales picking up strongly. Clothing had a tougher month due to the cold spell and comparisons with a sunny start to spring 2009.

Howard Archer, economist at IHS Global Insight, said: "Consumer spending has firmed modestly in recent months, but the upside is still limited.

"We expect this to remain the case for some time as households face very challenging conditions, notably high unemployment, low earnings growth, (and] elevated debt levels."