Retail sales slow in May

UK retail sales slipped by 0.4% in May on a like-for-like basis from May 2016, when they had dropped 0.5% from the preceding year.

The figures relate to the British Retail Consortium (BRC) -KPMG retail sales monitor, covering the four weeks from April 30 to May 27.

BRC chief executive Helen Dickinson OBE commented: “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.”

She continued: “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 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.”

KPMG UK head of retail Paul Martin added: “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 – although the highly competitive nature of the UK grocery market continues to play out in the consumer’s favour.”

He concluded: “Many retailers, particularly fashion stores, will be poised and ready to make the most of the upcoming summer, so hopefully the weather will play fair. An increased focus on managing costs will dominate the retail agenda.

“More imminently though, eyes will be firmly placed on the outcome of the General Election, with close attention being paid to the implications it might have on the industry.”

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