Retail sales in May fell 1.4 per cent month-on-month in both volume and value, according to the latest data from the Office for National Statistics (ONS).
The figures, which include automotive fuel sales, come after the royal wedding and the subsequent feel-good factor created by nationwide celebrations which helped drive sales up 1.1 per cent in April.
Vicky Redwood, Senior UK Economist at Capital Economics, said that data published in the ONS report would suggest that the retail sector is unlikely to contribute much to overall GDP growth in the second quarter.
She explained: “May’s sharp drop in the official measure of retail sales supported the picture already painted by other sales measures suggesting that April’s pick-up in high street spending was just a temporary reflection of the warm weather, royal wedding and extra bank holiday.”
Although sales were down month-on-month, the ONS said that May’s retail sales values were up 2.4 per cent year-on-year and flat in terms of volume, highlighting the impact January’s VAT rise and rising inflation is having on the cost of materials.
Today’s report indicated that prices in May 2011 were up 3.8 per cent compared with May 2010, with predominantly food stores experiencing the highest increase, reflecting soaring global food prices.
Head of Retail & Wholesale at Barclays Corporate Richard Lowe notes that, although prices have risen in general, many retailers are putting pressure on their margins by offering shoppers an array of discounted goods.
“The retail landscape remains anaemic and shops are working extremely hard to encourage consumers to part with their cash – it‘s hard not to notice the number of high street retailers which have started their summer sales early,” he commented.