Election and inflation jitters cause dramatic slowdown in online retail sales

online retail sales

Rising inflation and the recent General Election has led to online retail sales in the UK experiencing its lowest growth rate in more than 18 months, according to new data.

The latest IMRG Capgemini e-Retail Sales Index suggests that online sales were up 10.2 per cent year-on-year in May, the lowest growth rate since October 2015.

The index’s accompanying report highlighted how the months leading up to an election was often synonymous with a lower rate of growth than the equivalent months in non-election years.

However, rising costs may have also exacerbated the figures, with statistics from the ONS last week showing that inflation grew to 2.9 per cent in May.

READ MORE:  Inflation hits 4-year high, outpacing BoE predictions

The e-Retail Sales Index indicated that the clothing sector had its lowest figure for May ever, growing at just 7.6 per cent.

Meanwhile, the gifts sector was at its lowest growth rate since 2009 for May, at 5.5 per cent growth, while electricals experienced a dip in growth at —8.6 per cent, the only negative year-on-year change the sector has seen for May since the index began in 2003.

“As spending warms up with the start of summer, May and June are usually two of the strongest months of the year,” Capgemini consultant Bhavesh Unadkat said.

“With ongoing economic and political uncertainty, however, this month’s results show a clear reversal of that trend.”

READ MORE:  Consumer confidence on the up despite Brexit, inflation & the election

IMRG’s Andy Mulcahy added: “Shopper confidence tends to take a hit just before an election so, while the fact we were actually having a General Election may have been a surprise, a drop in online retail sales growth preceding it is not.

“Growth usually rises again soon afterwards – even in July 2016, the month after the Brexit vote and all the uncertainty that came with it, sales were up 18.6 per cent.

“The issue this time is that we now have a hung parliament, which leaves all political options still available, including the potential for yet another general election in the near future. 2017 is certainly turning out to be a very challenging year for retailers to navigate.”

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