Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “UK retail sales surprised to the upside in March, with volumes rising 0.7 per cent month-on-month, well ahead of expectations, leaving growth at a solid 1.6 per cent over the first quarter.
“Much of the strength was driven by a sharp rebound in fuel sales, alongside a lift from warmer weather and seasonal spending, but the underlying picture looks less convincing.
“Consumer confidence has already started to roll over and, with inflation and unemployment expected to rise from here, the risk is that this strength proves short-lived, with growth likely to stall in the coming months.
“That backdrop should keep the Bank of England cautious next week, and we expect rates to remain at 3.75 per cent, but the messaging is likely to stay cautious as policymakers remain wary of lingering inflation pressures and the risk of second-round effects.”
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