Retail sales fall 'a more accurate depiction'
Retail sales fell back in May amid inflation squeezing spending power and pre-election concerns.
In the four weeks to 27 May like for like UK retail sales decreased by 0.4% from May 2016, when they had increased 0.5% from the preceding year, according to the British Retail Consortium – KPMG Retail Sales Monitor.
On a total basis, sales rose 0.2% in May, against a growth of 1.4% in May 2016. This is the lowest since January, excluding Easter distortions, and below the three-month and 12-month averages of 1.9% and 1.2% respectively.
Over the three months to May, food sales increased 3.2% on a like-for-like basis and 4.3% on a total basis. This is the strongest 3-month average since February 2012, excluding Easter distortions. This pulls the 12-month total average growth to 2.2%, the highest since January 2014.
Over the three-months to May, non-Food retail sales in the UK decreased 0.3% on a like-for-like basis and increased 0.1% on a total basis, below the 12-month total average growth to 0.5%. May’s total non-food performance was the worst recorded since May 2011.
Over the three-months to May, online sales of non-food products grew 7.0% while In-store sales declined 1.8% on a total basis and 2.3% on a like-for-like basis, below the like-for-like 12-month average decline of 2.0%.
‘After the pick-up in sales over Easter, consumer spending slowed again in May resulting in almost flat growth on the previous year. Underneath the headlines, there’s continued variation in the performance of food versus non-food products, as sales performance of the two become increasingly polarised. Food sales, albeit positively distorted by inflation, continue to see annual growth, while in non-food categories which are predominantly capturing discretionary spending, retailers find themselves having to compete even harder,’ said Helen Dickinson BRC chief executive.
‘Overall, May’s sales slowdown is indicative of a longer term trend of a decline in consumer spending power. As household budgets become increasingly squeezed by inflation, predominantly in the non-retail part of the consumer basket, it’s vital that the next Government helps retailers keep prices low for ordinary shoppers. This means, as well as securing a tariff-free trade deal with the EU, negotiating frictionless customs arrangements; providing certainty for EU colleagues working in the UK; and ensuring the continuity of existing EU legislation as it transfers into UK law.’
Paul Martin, KPMG UK head of retail said: ‘’After the surge in retail sales last month – the by-product of this year’s relatively late Easter – retailers have been brought back down to earth with a thump. Like-for-like retail sales contracted in May, which is likely to represent a more accurate depiction of the state of UK retail currently. The impact of inflationary pressures on the nation’s purse continues to play out in this month’s figures, with shoppers evidently spending more on food and drink than on non-food purchases. With inflation continuing to rise and wage growth stagnating, consumers are starting to feel the pinch.’