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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 23​​ May, 2017

Real wage growth falls in April

​Consumer prices jumped 2.7% in the year to April, up from a 2.3% rise in March, the fastest increase since 2013. The rise is being driven by the cost of imported goods increasing due to the low value of the pound. Consumer prices are now rising faster than earnings, and despite unemployment rate being at the lowest levels since 1975, real wages have fallen for the first time in 30 months. Earnings excluding bonuses fell by 0.2% in Q1 after accounting for inflation, according to the ONS. The resulting income squeeze is one that economists have been warning about since the Brexit vote, and is putting household budgets under increasing pressure.

However, individual retailers continue to demonstrate resilience, and have reported broadly positive results this week. LFLs at Moss Bros were up 5.5% in the 15 weeks to May 13, as it beat the tough conditions in the fashion market. Sales at Clarks rose 7.9% in the year to January 31, driven by sales of products overseas. LFLs at Mothercare increased 1.1% in the year to March 25. Helped by its £2 breakfast deal and its Balanced Choice options, LFLs at Greggs rose 3.6% in the first 19 weeks of 2017, while total sales rose 7.5%.

And further positive news comes from a number of retailers announcing expansion plans this week. Ikea has revealed it will create 1,300 more jobs in the UK as it opens stores in Sheffield, Exeter and Greenwich, south London. Ikea is also considering making more products in the UK and sourcing local suppliers for the UK market, in an attempt to balance the cost of importing goods. Other retailers to announce expansion plans include JD Sports, Co-op and Next.

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