Retail Sales slip in May as prices increase

According to the latest ONS data, Retail Sales volumes fell 1.2% and value declined 1.1% in May, worse than the falls expected by City Economists. Following a jump of 2.5% in April, due mainly to the un-seasonably good weather and the timing of the Easter break, the May figures provided a stark contrast.

The ONS measurement of the annual rate of growth in May fell to 0.9% the lowest level of growth since April 2013, and below the City expectations of a 1.7% increase.

Consumers have increasingly been feeling the impact of increased prices and weak wage growth, impacting on disposable income and household expenditure growth, which has been the driver of the UK economy over the last few years. Retail Sales are increasingly been seen as a key barometer of the health of the UK economy, accounting for almost 20% of total GDP.

The recently released Inflation figures showed an increase of 2.9% in May 2017, whilst average real wages fell 0.6% in the three months to April 2017.

Read - Inflation hits 5 year high

With the exception of fuel, every single retail category reported a decline in May sales, compared to April. The volume of household goods sold (including home improvement) fell by 5.7%, while food sales declined the least at -0.9%. This suggests that consumers are prioritising essential purchases as opposed to discretionary items, such as home improvement, furniture and electronics.

The ONS also tracks an estimate of internet sales and the value of all non-food products in May increased 12.4% when compared to a year earlier.

Source: Insight DIY Team

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