UK Retail Sales tumble in May

UK retail sales fell more than twice as fast as expected in May as consumers stopped spending after a splurge the previous month encouraged by the sunny weather, the Royal Wedding, and the Easter break.

Official data said retail sales volumes more than reversed the previous month's 1.1pc gain with a drop of 1.4pc, including petrol, as worries about the economy resurfaced hitting food stores and household good retailers.

The Office for National Statistics said It was the biggest fall since January 2010 and well below analysts' forecasts for a fall of 0.6pc.

The figures are likely to reinforce the case for the Bank of England to leave interest rates at their record low 0.5pc for some time to come, amid signs the economic recovery is running out of steam.

Mervyn King, the Governor of the Bank of England, said in a speech last night that Britain is in the middle of “seven lean years” caused by the economic crash.

The ONS said the fall was driven by the biggest monthly decline in predominantly food store sales since June 2008. Retailers said consumers were cutting back in the face of a sluggish recovery, rising fuel prices and uncertainty over jobs and pay.

Anecdotal evidence suggested the drop in food store sales was mainly due to a decline in spending non-food items. Retailers said sales had been driven by special offers.

May's drop in sales volumes more than reversed the boost to sales from the the Royal Wedding and record warm weather in April, which had driven up retail sales at their fastest pace for a month of April since 2002.

A survey by the British Retail Consortium had already shown a big fall in like-for-like sales over the same period.
Britain's biggest household goods retailer Home Retail, which owns the Argos high street chain, reported shoppers have dramatically cut purchases of electrical goods and warned that trading conditions would get worse.

With inflation expected to rise futher this year, economists expect consumer spending to remain under pressure.

Source : Telegraph.co.uk
www.telegraph.co.uk/finance/economics/8579082/UK-retail-sales-tumble-in-May-as-Easter-splurge-ends.html