British retail sales fell in May as consumers tightened their belts amid the deepening cost-of-living crisis, fueling concerns about a slowdown in the UK economy.
The amount of goods purchased in Britain fell 0.5% between April and May, reversing the previous month’s expansion, according to data released Friday by the National Statistics Office.
This was only slightly better than the 0.7% fall forecast by economists surveyed by Reuters, but the May statistic was helped by sharply revised April figures.
However, buyers spent 0.6 percent more than the previous month, although the volume was lower, exposing the impact of rising inflation on household finances.
The fall in May was “driven by a decline in food sales,” said Heather Bovill, deputy director of ONS surveys and economic indicators.
He added that comments from supermarkets suggested that “customers spend less on their grocery store, due to the rising cost of living.”
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Sales of household items and purchases made in department stores also fell sharply. Bovill said retailers in these areas reported a “reluctance on the part of consumers to spend due to accessibility concerns and higher prices.”
This comes when separate data from research firm GfK, also released on Friday, showed that UK consumer confidence fell in June to its lowest level since records began in 1974.
Lisa Hooker, industry leader for PwC’s consumer markets, said platinum jubilee celebrations and sunny weather “couldn’t make up for the wider drag of the cost-of-living crisis on sales in the UK. detail “.
Consumers were being hit by the “triple blow” of a rise in national insurance taxes, a sharp rise in food prices and a significant rise in the energy bill limit in April, said Maxim Syn, of the global financial services company Ebury, with “everyone’s tablets” household budgets. directions. ”
The contraction of 1.6% in food sales volumes in May follows an increase in annual food inflation to 8.6%, according to separate official data earlier in the week. As a result, many customers are “buying down,” said Helen Dickinson, executive director of the British Retail Consortium, especially with food, choosing valuables where they could have previously bought premium goods.
The data increase the likelihood of an economic recession, economists warned.
Thomas Pugh, of business advisory firm RSM UK, said the recent negative data flow pointed to an economic contraction in May, continuing the lack of growth seen since January. He expected the economy to contract 0.5% in the second quarter.
George Lagarias, chief economist at accounting firm Mazars, said reducing consumer spending would bring “the UK economy closer to a recession”.
However, markets still expect the Bank of England to raise interest rates in August, as it faces the fastest inflation rate in 30 years, increasing pressure on household finances.
Holiday shopping increased clothing sales in May and workers returning to the office spent more on filling their vehicles.
However, sales volumes fell 1.3 percent in the three months to May compared to the previous three months.
Retail sales volumes have fallen from their peak in the spring of last year as consumers again spend on bars and restaurants, not included in the figures, instead of buying groceries.
Jamie Rackham, founder of the Facebook group of 194,000 small producers Not On Amazon, said, “Everything costs more to produce while people have less to spend.”