20 Feb 2015
UK retail sales might surprise to the upside – TDS
FXStreet (Barcelona) - The TD Securities Team views that UK’s retail sales might come in strong, with the recent UK CPI print expected to tilt the risks to the upside.
Key Quotes
“After three months of substantial upside surprises, we were initially expecting UK retail sales to come back down to earth in January, but after the CPI report earlier this week the risks are more two-sided.”
“Food store volumes have the potential to hold up well again given the continued softness in prices and the rebound in Waitrose sales during the month. But clothing sales may be a little softer due to the lack of discounting in January, although we could also tell the story that retailers may not have needed to discount so heavily because sales were holding up so well already.”
“So on a net basis it looks like after the CPI data the risks are now tilted toward sales coming in above consensus (which is looking for –0.3% for ex-fuel sales) for the 4th straight month, given softer price pressures and strong employment and wage growth. UK consumers seem to be taking full advantage of the fall in energy prices.”
Key Quotes
“After three months of substantial upside surprises, we were initially expecting UK retail sales to come back down to earth in January, but after the CPI report earlier this week the risks are more two-sided.”
“Food store volumes have the potential to hold up well again given the continued softness in prices and the rebound in Waitrose sales during the month. But clothing sales may be a little softer due to the lack of discounting in January, although we could also tell the story that retailers may not have needed to discount so heavily because sales were holding up so well already.”
“So on a net basis it looks like after the CPI data the risks are now tilted toward sales coming in above consensus (which is looking for –0.3% for ex-fuel sales) for the 4th straight month, given softer price pressures and strong employment and wage growth. UK consumers seem to be taking full advantage of the fall in energy prices.”