Retail

UK Retail Sales Dip As Consumers Spend More In Dining Out

Share this article

British retail sales fell unexpectedly last month as a lifting of lockdown restrictions encouraged spending in restaurants rather than shops, according to official data.

Retail sales fell 1.4% between April and May, the Office for National Statistics said.

A Reuters poll of economists had pointed to an 1.6% month-on-month increase in retail sales volumes for May. Only three of 19 forecasts showed a fall.

Food stores suffered the biggest hit, with a 5.7% drop in sales. Separately on Friday supermarket chain Tesco, Britain's biggest retailer, reported a sharp slowdown in underlying UK sales growth in its first quarter.

"Anecdotal evidence suggests the easing of hospitality restrictions had an impact on sales as people returned to eating and drinking at locations such as restaurants and bars," the ONS said.

Last month, data from the Confederation of British Industry revealed that the monthly balance for whether sales were above or below normal for the time of year dropped to -3 in May from +16 in April, indicating roughly normal volumes.

Weak Retail Sales

Most economists said the weak retail sales data was not necessarily suggestive of weaker consumer spending as the economy recovers from the COVID-19 pandemic, since hospitality businesses have reported booming trade.

But Samuel Tombs, at consultancy Pantheon Macroeconomics, said more recent payment card data suggested that the surge in consumer spending could be losing steam.

"Households' real disposable income looks set to fall in Q4, as the end of the furlough scheme reduces employment and inflation rises to match wage growth," he said.

The rapid advance of the "delta" variant of COVID-19, despite Britain's swift roll-out of vaccines, could also crimp household spending in the weeks ahead.

An end to lockdown in England that had been scheduled for Monday has been delayed for four weeks.

Annual Comparison

In annual terms, retail sales were 24.6% higher than May last year, short of the median expectation for a 29.0% increase.

Household good stores bucked the wider decline with month-on-month growth of 9.0%, which the ONS linked to spending on outdoor goods.

Earlier this week, motoring and outdoor goods store Halfords said it had been doing a roaring trade in bicycles.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

Stay Connected With Our Weekly Newsletter

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our Terms & Conditions and Privacy Policy
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days
Enjoy unlimited digital access for 30 days
Get exclusive access to the latest grocery retail & FMCG news, interviews with industry leading executives, and expert analysis on the trends shaping the sector today
Enjoy unlimited digital access for 30 days

Copyright © 2022. All rights reserved. Developed by Square1 and powered by PublisherPlus.com