Retail sales shot up in May, smashing expectations thanks to continued warm weather and the royal wedding, suggesting the economy could be on the mend.
According to the latest figures from the Office for National Statistics (ONS), retail sales volumes jumped 1.3 per cent last month, more than doubling analysts’ expectations of a 0.5 per cent rise.
This followed a revised 1.8 per cent bounce back in April, which again more than doubled expectations.
- April retail sales more than double expectations (ONS)
- Retail sales bounce back at record rate in May (BRC-KPMG)
- May footfall marginally improves despite sales boost
- May consumer confidence improves despite remaining in negative territory
- Shop prices drop again in May amid tough conditions
- Inflation remains flat in May despite huge rises in fuel costs
On a three-month basis, sales rose 0.9 per cent, way above the 0.2 per cent increase in the three months to April which were hindered by unseasonably poor weather conditions.
Sales also rose 3.9 per cent compared to the same month last year, the highest rise in more than a year and once again more than double forecasts.
This has re-sparked speculation that the Bank of England could be considering raising interest rates, after holding off until the economy recovered.
“Retailers suggested that a sustained period of good weather and Royal Wedding celebrations encouraged spending in food and household goods stores in May,” the ONS said.
The British Retail Consortium’s (BRC) head of retail insights Rachel Lund added: “The arrival of a consistent spell of summery weather unlocked latent demand for summer wardrobes and outdoor goods.
“This comes as a welcome sign for retailers that shoppers are still willing to spend, however, one swallow doesn’t make a summer.
“Trend sales growth remains low; with average year on year growth in volumes dropping to just 1.6 per cent over the last twelve months, compared to the 4.2 per cent recorded at this time last year.
“The economic environment remains tough for both consumers and retailers alike and is likely to remain so for some months to come.”
Hargreaves Lansdown’s senior economist Ben Brettell said: “This was well ahead of economists’ forecasts, and sterling reacted postively, jumping almost half a cent against the dollar following the release.
“Some traders will be betting that a stronger retail performance strengthens the case for higher interest rates this summer.
“It’s welcome good news for the UK economy following some recent disappointments, notably from the manufacturing sector.
“But despite today’s positive report from the ONS, news from individual companies continues to paint a somewhat gloomy picture for the UK’s bricks-and-mortar retailers.
“House of Fraser and Poundworld are the latest names to run into trouble. With the most recent set of numbers from online fashion retailer boohoo.com showing a 49 per cent jump in UK sales, it’s not difficult to work out where those high street customers have been going.”