Bank holidays, takeaways and warm weather boost May retail sales
UK retail sales are estimated to have risen 0.3% in May, the second positive month on record, official statistics reveal.
The May sales volumes (quantity bought) follow an unrevised rise of 0.5% in April, with the bank holidays, King’s Coronation and warm weather encouraging Brits to spend.
According to the Office for National Statistics (ONS), spending in food stores fell 0.5% while anecdotal evidence suggested a boost in spending on takeaways and fast food. But retailers also indicated that the cost of living and food prices continue to affect sales.
Sales of outdoor-related goods and summer clothing bumped up non-store retailing sales volumes by 2.7%, while fuel spend also rose 1.7%.
The ONS said some of the increase may be because of falling fuel prices which now stand at their lowest level since February 2022. However, sales volumes were 9.5% below their pre-coronavirus February 2020 levels.
The warm weather also boosted household goods stores by 1.5% due to strong sales in DIY stores.
Consumer spending remains robust, but for how long?
Charlie Huggins, manager of the quality shares portfolio at Wealth Club, said: “Retail sales volumes in May came in slightly better than expected, with better weather helping online sales of both outdoor goods and summer clothing.
“Consumer spending remains robust in the face of inflationary pressures and results from retailers themselves back this up. The big question is how much longer this can persist?
“Mortgage rates have increased significantly in recent weeks and inflation is at risk of becoming entrenched. This doesn’t bode particularly well for consumer confidence in the back half of the year. At that point retailers may really start to feel the pinch. But for now, the UK consumer continues to defy the doom mongers.”
Kelly Miely, retail partner at Deloitte, said: “A price sensitive consumer is likely to stay with retailers that remain competitive by offering good value product ranges and cutting price of core items.”
Ruth Gregory, deputy chief UK economist at Capital Economics, added: “Overall, the figures were far better than we had expected. But our view is still that the growing drag on activity from higher interest rates will eventually tip the economy into recession, generating a 0.5% peak to trough fall in real consumer spending.”