British retail sales decline as slowdown fears intensify
UK retail sales contracted in May as consumers tightened their belts amid a cost of living crisis, fueling concerns about a downturn in the UK economy.
The amount of goods purchased in Britain fell 0.5 percent between April and May, reversing growth in the previous month, according to data released Friday by the Office for National Statistics.
This was only marginally better than the 0.7 percent drop economists predicted by Reuters.
However, shoppers spent 0.6 percent more than in the previous month, even if volume was lower, exposing the impact of rising inflation on household finances.
The May drop was “driven by a decline in food sales,” said Heather Bovill, ONS deputy director for surveys and economic indicators.
She added that feedback from supermarkets suggested that “customers are spending less on their food store due to the rising cost of living”.
Food sales fell by 1.6 percent. An increase in clothing sales, which Bovill said was fueled by shoppers buying before the summer holidays, was offset by a decline in household items, down 2.3 percent. Department store sales also fell sharply.
Retail sales volumes have been declining since their peak in the spring of last year as consumers have returned to spending on bars and restaurants, which are not included in the figures, rather than shopping for groceries.
This comes as separate data from research firm GfK, also released on Friday, showed UK consumer confidence fell in June to its lowest level since records began in 1974.
Both sets of data increased the likelihood of an economic contraction in the second quarter.
Ellie Henderson, an economist at Investec, said the magnitude of the rise in gas and energy costs, plus other problems facing households, including the rise in national insurance, “will sharply slow the pace of high street activity in 2022 as a whole”.