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UK retail sales drop due to inflationary pressures

RBR Staff Writer Published 07 June 2017

Retail sales in the UK have declined in May 2017 as consumers kept a tab on their spending due to to rising inflation.

Last month, UK retail sales decreased by 0.4% on a like-for-like basis from May 2016, when they had increased 0.5% from the preceding year.

The figures were reported in the latest BRC-KPMG Retail Sales Monitor May 2017.

On the other hand, sales volume in May increased marginally by 0.2% but quite low in comparison to a 1.4% increase in the same month last year.

As per the  British Retail Consortium (BRC), the sales volume figure for May is the lowest in the current year with the exclusion of Easter distortions. It was also under the 3-month average of 1.9% and the 12-month average of 1.2%.

BRC CEO Helen Dickinson said: “Overall, May’s sales slowdown is indicative of a longer term trend of a decline in consumer spending power.

“As household budgets become increasingly squeezed by inflation, predominantly in the non-retail part of the consumer basket, it’s vital that the next Government helps retailers keep prices low for ordinary shoppers.”

The sales report show that in the three months leading to May, UK’s non-food retail sales dropped 0.3% on a like-for-like basis. On a total basis, they increased 0.1% which was under the 12-month total average growth of 0.5%.

BRC says that the total performance of non-food retail sales was the lowest seen in the UK since May 2011.

However, it said online sales of non-food products surged 7% in the three-month period leading to May. In the same period, there was a decline by 1.8% for in-store sale on a total basis, and 2.3% drop on a like-for-like basis which was under the like-for-like 12-month average decline of 2.0%.

In the food segment, sales moved up 3.2% in the three months to May on a like-for-like basis, and grew 4.3% on a total basis. This, BRC says is the highest 3-month average since February 2012 after removing Easter distortions.

As a result, BRC stated that the 12-month total average growth has been pulled up to 2.2% which is the highest since January 2014.

KPMG UK retail head Paul Martin said: “After the surge in retail sales last month – the by-product of this year’s relatively late Easter – retailers have been brought back down to earth with a thump. Like-for-like retail sales contracted in May, which is likely to represent a more accurate depiction of the state of UK retail currently.

“The impact of inflationary pressures on the nation’s purse continues to play out in this month’s figures, with shoppers evidently spending more on food and drink than on non-food purchases.”

Image: BRC reports that UK retail sales in May slowed down due to inflation. Photo: Courtesy of FreeDigitalPhotos.net/Ambro.