Preview of the UK retails sales data 26 March 2015
The UK consumer is in focus at 09.30 gmt as we get retail sales for Feb
We're expecting total sales in Feb to rise 0.4% vs -0.3% m/m in Jan, and 4.7% vs 5.4% prior y/y
Last month saw the 22nd consecutive month of y/y gains which puts the retail sector in a fairly good place. Jan and Feb can be fairly big discounting months and with the current price falls and continuing supermarket price wars, it could mean we see a drop in the sales numbers today.
The issue with retail sales in a falling price environment is that the prices can mask the actual activity. Sales changes are calculated on spend so lower prices mean less £ amounts through the tills. It doesn't mean less items are being bought. What we would hope is that money saved in one area is spent in another and bigger ticket items get purchased as they become more affordable. Sales rising in this environment will be a very bullish signal for the economy overall
As we know, retail sales can be a volatile number at the best of times but we shouldn't necessarily view a bad number today as meaning the UK consumer is running dry on spending. As always the devil will be in the detail
Trading wise, with the fall in USD/JPY now affecting cable we could have an opportunity to fade a poor number drop in the pound to play the current trend we're seeing today. Of course a good number will only add to the gains we're seeing