The Waitrose numbers show an acceleration in trend, Tesco has mentioned it in passing and this week Sainsbury confirmed that since the Whitsun Bank Holiday, its like-for-like sales growth run rate had doubled.
But is this just a weather and World Cup-induced spike? Will we see a corresponding slump in trade, back to April/May-like levels, when (heaven forbid) England get knocked out and the sun goes in? We don't think so, and here at Oriel Securities we don't think investors should consider this a blip.
Following a difficult 18 months, we think we are about to see the beginning of an upsurge in consumer confidence. Unemployment remains under control and average earnings growth is strong. Interest rates have stayed nominally low, and property prices are starting to rise again. Housing transactions are on the rise, too. Macro trends are starting to move in the consumer's favour and we don't believe that a hike in interest rates in November will have an impact on consumer confidence until the middle of next year in any case.
From a household profit and loss viewpoint, there's some solace too. We spent most of last summer stressing about £1/litre petrol. Now it's barely worthy of mention, nor is it an extra pressure on our wallets, year-on-year. For sure, concerns remain over increasing tax burdens, but it feels to us that the greatly feared holes in family budgets never really materialised and, with house prices moving again, we're starting to relax, and maybe reach deeper into our pockets again.
Of course, if we're right, the impact on sales in the more cyclical non food sector will be more marked. But that's not to say that food retailers won't benefit too. I talked about the "flight to quality" and the increasing inclination of the UK public to eat healthily last month, and a more confident consumer seems very unlikely to turn his or her back on that trend.
And, of course, the food retailers sell an awful lot of non food these days anyway.
The companies will doubtless play down their current excellent trading form, encouraging us to expect a reversion to the average, but our firm view is that, in sales growth terms, 2006 will go down as a much better than average year for the food retail sector.