On an annual basis, retail sales volumes decreased by 4.7% compared to May 2021.
But the amount spent jumped 5% year-on-year, underscoring how inflation is eating away at income.
Ralph Robinsonhead of retail at technology consultancy BJSS, said retailers could face a tough summer as customers set tighter spending limits.
“It’s no surprise that consumer confidence is so low; amid a further rise in inflation, the poor performance of the FTSE, supply chain uncertainty and a looming recession, it looks like retailers are struggling to elicit anything other than unavoidable expenses, such as food, with holiday fashion being the one notable exception. For me, ASDA Chairman Stuart Rose sums up current consumer sentiment best – explaining how shoppers are now setting £30 spending limits at checkouts, even further than the £40 limits cited by the Tesco chairman John Allan just a month ago.
“Unfortunately, while retailers will be hoping for a bumper set of results next month, there are few signs of a turnaround as retailers face additional strain on supply chains brought on by Covid pressures. in China, the rail strikes in the UK and the ongoing conflict in Ukraine, combined with reduced traffic on the main street. While we hope for an uptick, with inflation showing no signs of abating, retailers will likely worry that this trend will continue through the summer season.
Households reined in spending as the cost-of-living crisis continued to weigh on consumer demand, according to Helen Dickinson, general manager of the UK Retail Consortium:
Many customers are shopping for less, especially for food, choosing value range items where they might have purchased premium products before. High-value items, such as furniture and white goods, were also affected as shoppers reconsidered major purchases during this difficult time.
Rising operating and input costs have driven up prices, meaning retailers and their customers both face “tough times ahead”, Dickinson adds:
Supermarket feedback suggests customers are spending less on their grocery store, due to rising cost of living, says Heater Boville, NSO Deputy Director of Surveys and Economic Indicators.
Here is his analysis of today’s retail sales report:
Clothing stores experienced a busier month of May, with clothing sales rising 2.2% in the month.
But consumers cut home goods, where sales fell 2.3%, and department stores, where volumes fell 1.1%.
Automotive fuel sales volume rose 1.1% in May.
This may be due to an increase in hybrid working and a drop in the number of those working exclusively from home, according to the ONS.
Retail sales fell in May as the rising cost of living is hitting household budgets, forcing people to cut back on food purchases.
Retail sales volumes in Britain fell 0.5% in May from April, or 0.7% excluding fuel, according to figures just released.
Lower sales volumes were driven by lower spending at grocery stores, which fell 1.6% month-on-month.
Reduced spending in grocery stores appears to be linked to the impact of rising food prices and the cost of living, according to the Office for National Statistics.
But…buyers had to spend After to get less. Retail sales value increased 0.2% month-over-month and 0.6% after you add fuel (which reached record prices).
Inflation reached 9.1% in May, the highest in 40 years, which intensified the compression of wages.
In the three months to May 2022, sales volumes decreased by 1.3% compared to the previous three months. This “continues the downward trend since the summer of 2021”, says the ONS.
Hello and welcome to our ongoing coverage of business, the global economy and financial markets.
British consumer confidence has fallen to its lowest level since records began nearly 50 years ago as the cost of living crisis hits households and a summer strike looms.
Research company GfK’s The monthly Consumer Confidence Index survey hit a new high this month, dropping one point to -41 in June.
There has been a particularly sharp drop in people’s personal financial expectations as inflation has taken a toll on incomes.
Measures of how personal finances have changed over the past year and the general economic situation over the past year and the year after have all fallen.
Joe StatonCustomer Strategy Director, GfK says Britain is facing a new economic reality and people are reacting accordingly:
With prices rising faster than wages and the prospect of strikes and runaway inflation provoking a summer of discontent, many will be surprised the index hasn’t fallen yet. Consumer sentiment is currently gloomier than at the onset of the Covid pandemic, the outcome of the 2016 Brexit referendum and even the shock of the 2008 global financial crisis, and there is now talk of an impending recession.
One thing is certain, Britain is facing a new economic reality and history shows that consumers will not hesitate to entrench and tighten their purse strings when the going gets tough.
British bosses are also darker.
Flash estimates of the performance of the economy in June, released yesterday, showed business optimism at the lowest since the early months of the Covid pandemic in spring 2020 and the biggest drop in new order volumes for a year .
Later in the day, we’ll find out to what extent optimism holds (or doesn’t) among German investors and US consumers, as fears that major economies could tip into recession grow.
- 7am BST: UK retail sales for May
- 9am BST: IFO German Business Confidence Index
- 2.30pm BST: Bank of England Chief Economist Huw Pill delivers a speech on ‘Inflation and debt – monetary policy challenges after Covid-19’
- 3pm BST: University of Michigan survey of US consumer sentiment
- 3:00 p.m. BST: US new home sales report for May