UK retail sales worse than expected
Sales volumes fall 1.2% in May as higher prices prompt shoppers to reduce spending
The amount sold by UK retailers grew at the slowest rate for four years in May, as higher prices prompted shoppers to cut back, according to data published on Thursday by the Office for National Statistics.
Sales volumes fell 1.2 per cent month on-month, worse than the 0.8 per cent fall analysts had expected. The figures come after strong month-on-month volume growth of 2.3 per cent in April, but economists said those figures had been distorted by the timing of Easter.
Retail sales were 0.9 per cent higher in May compared with the same month last year, after adjusting for higher prices. Last May, retail sales were growing at an annual rate of 5.5 per cent.
“We have not seen lower growth on the year since April 2013,” said Ole Black, senior ONS statistician. “Increased retail prices across all sectors seem to be a significant factor in slowing growth.”
The data suggest shoppers are feeling the pinch from Brexit, as the fall in the pound starts to feed through into higher prices for consumers
Consumer spending was initially strong following the EU referendum vote last June, as shoppers remained confident and kept borrowing while investors and businesses were slightly more wary. At the time, economists said they expected spending could slow down as retailers started to pass on higher import costs.
Average store prices, excluding fuel, were 2.8 per cent higher than a year ago in May, according to the ONS. This meant that the amount spent in the retail industry was 4.1 per cent higher than May 2016, despite the volume of sales only increasing slightly.
Retail sales account for about a third of household spending in the UK, with the rest of household spending focused on services such as pubs and restaurants, or utilities, such as gas and electricity.
Official inflation figures published earlier this week found that consumer prices were 2.9 per cent higher in May than a year ago, while ONS labour market statistics showed that wages had only increased 1.7 per cent in the year to April..