High Street gloom twice as bad as expected

THE plight of the UK consumer returned to the fore yesterday as new official data showed retail sales slumped more than twice as much as anticipated in May.

Retail spending dropped off sharply with the end of April’s sunny weather and public holidays, leaving sales down 1.4 per cent in May, or 1.6 per cent when petrol sales were excluded.

Sales fell from a 1.1 per cent growth in April and were dramatically below expectations of an 0.6 per cent increase for May.

Economists blamed a combination of job insecurity, poor wage growth and high inflation for people’s reluctance to spend. They said the figures added to expectations that the Bank of England would delay raising interest rates for months to come.

“These figures are in line with the state of the wider economy and paint a more realistic picture of the subdued consumer sentiment,” said Nida Ali, economic advisor to the Ernst & Young Item Club.

The figures chime with trading updates from supermarkets Tesco and Sainsbury this week showing shoppers cut back on purchases as high fuel prices reduced their spend.

The ONS data showed food sales falling 3.5 per cent in May compared with May 2010, while clothing sales grew at 1.1 per cent year-on-year.

IN NUMBERS: RETAIL SALES

Year-on-year food store sales fell 3.5%

Retail sales fell 1.4%

Analysts expected rise of 0.6%

Year-on-year sales were up 0.2%

Retail sales came back down to earth in May, with a monthly drop of 1.4 per cent.

Source : Alison Lock - City AM
http://www.cityam.com/news-and-analysis/high-street-gloom-twice-bad-expected