Retailers “brought back down to earth with a thump” as May sales wane

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retail sales

Retail sales in May suffered a 0.4 per cent drop as rising inflation started to effect consumer behavior.

New figures from the British Retail Consortium (BRC) indicate that last month saw a 2.7 per cent rise in inflation, the highest level in nearly four years.

Although total sales marginally increased by 0.2 per cent, this is seven times smaller than the 1.4 per cent growth a year prior.

According to the report, food sales continued to outperform other retail sectors, showing the highest three-month growth since 2012 rising 3.2 per cent in the quarter to May.

This growth was offset by a 0.3 per cent drop in non-food like-for-likes over the same period.

Meanwhile, online spending also slowed, showing non-food sales increasing just 4.3 per cent — under a third of its 13.7 jump in May 2016, marking the lowest rate of online growth in five years.

“After the pick-up in sales over Easter, consumer spending slowed again in May resulting in almost flat growth on the previous year,” BRC chief executive Helen Dickinson said.

READ MORE: May retail sales divebomb after promising April

“Underneath the headlines, there’s continued variation in the performance of food versus non-food products, as sales performance of the two become increasingly polarised.

“Food sales, albeit positively distorted by inflation, continue to see annual growth, while in non-food categories which are predominantly capturing discretionary spending, retailers find themselves having to compete even harder.

“Overall, May’s sales slowdown is indicative of a longer-term trend of a decline in consumer spending power.

“As household budgets become increasingly squeezed by inflation, predominantly in the non-retail part of the consumer basket, it’s vital that the next Government helps retailers keep prices low for ordinary shoppers.”

KPMG UK boss Paul Martin added: “After the surge in retail sales last month – the by-product of this year’s relatively late Easter – retailers have been brought back down to earth with a thump.

“The impact of inflationary pressures on the nation’s purse continues to play out in this month’s figures, with shoppers evidently spending more on food and drink than on non-food purchases.”

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