UK retail sales fall as consumers still feel squeezed

After a cracking Easter last month, retailers were “brought back down to earth with a thump” said the UK head of KPMG Pau Martin. Total sales during the period edged up 0.2%, against growth of 1.4% last May.

The woeful figures come as the UK inflation rate increased to 2.7% in May – its highest since September 2013.

Strong food sales growth

The latest BRC retail sales report found that like-for-like sales in food increased 3.2% in the three months to May – the strongest three-month growth since February 2012. For non-food sales, like-for-likes fell 0.3%.

As for online, sales of non-food items increased 4.3% in May, much lower than the 13.7% jump in the same month last year. The BRC said it was the lowest growth since December 2012.

BRC chief executive Helen Dickinson said: “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.

“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.”

Inflationary pressures

Martin 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. 

“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.”