ONS reports better than expected May retail sales figures

Heavy discounting and promotions at department stores helped pull in cash-strapped consumers and push up retail sales last month, official figures show.

Retail sales volumes increased 1.4% in May, following a revised 2.4% drop in April, the Office for National Statistics (ONS) said. City analysts had expected a rise of around 0.8%.

The increase was driven primarily by a 6.2% surge in fuel sales, as March's fuel strike threat continued to have an impact, but there was evidence that a fall in prices at department stores also lifted volumes. Stripping out the impact of fuel, total retail sales volumes increased by 0.9%.

The rate of inflation has fallen back throughout 2012, from a 5.2% peak last September to 2.8% in May, as weak economic growth weighed on pricing power.

Total retail sales plunged in April as heavy rain hit clothing and footwear retailers.

A bright spell of sunshine later in May had a small impact on the clothing sector, the ONS said, which rebounded after a dismal April to record 3.4% growth in sales volumes.

Non-specialised stores – or department stores, such as John Lewis and House of Fraser – saw volume growth of 0.8% on the month and 11.3% when compared with May last year.

The ONS estimates that the price of goods in department stores on average have fallen 2% in the last 12 months.

Discounting and promotions were also seen in 'other' stores, a broad category including computers, books and newspapers, and toiletries and cosmetics.

Food sales had a weak month, growing just 0.2%, but the survey period ended on 26 May and did not include the final run-up to the Queen's Diamond Jubilee, which is expected to boost sales in June's survey.

Non-store retailing volumes, which include internet sales, increased 1.5% on the month.

Consumers spent £26.4bn in May compared with £26bn in the previous month.

The average weekly amount spent online is now up 22% compared with £510.9m a year ago.

Source : The Guardian
www.guardian.co.uk/business/2012/jun/21/retail-sales-rise-shop-promotions?INTCMP=SRCH