UK Retail Sales Rebound in May but Shoppers Still Cautious

British retail gross sales jumped sharply final month after heavy rain stored consumers away in April, official figures confirmed on Friday, in a minor increase for Prime Minister Rishi Sunak forward of the July 4 election.

Gross sales volumes rose 2.9 p.c in Could, up from a revised 1.8 p.c fall in April, the Workplace for Nationwide Statistics stated.

Economists polled by Reuters had on common forecast gross sales volumes would improve by 1.5 p.c in Could.

In comparison with a 12 months in the past, Could’s gross sales volumes have been 1.3 p.c larger, after a revised 2.3 p.c fall in April, however remained 0.5 p.c under their stage in February 2020 earlier than the COVID-19 pandemic.

The ONS stated yearly gross sales development may also be distorted by an additional public vacation in Could 2023 to mark King Charles’ coronation.

Lisa Hooker, a client markets specialist at PwC, stated Could’s gross sales development was much less sturdy than it checked out first look, as soon as the additional buying and selling day, a lower in worker payroll taxes and an increase within the minimal wage have been taken into consideration.

“We’d have anticipated a bigger enchancment in gross sales volumes,” she stated.

British consumers have been squeezed by excessive inflation which solely returned to the BoE’s 2 p.c goal final month after exceeding it for almost three years.

Common wages at the moment are rising quicker than inflation and client sentiment in June had recovered to its highest since November 2021, in line with figures from Britain’s longest-running client confidence survey earlier on Friday.

The ONS stated gross sales volumes rose throughout most sectors final month, with clothes retailers and furnishings shops rebounding particularly strongly following poor climate in April.

The advance comes after many retailers reported that discretionary spending was below strain within the first quarter of 2024.

Tesco, Britain’s greatest meals retailer, final week reported a robust first quarter. Nonetheless, sportswear vendor JD Sports activities Trend lately reported a drop in first quarter UK gross sales, whereas couch retailer DFS Furnishings warned on revenue.

“Though macroeconomic indicators – together with rates of interest, inflation, and wages are bettering – it appears shoppers are biding their time, ready for a extra optimistic local weather earlier than loosening their purse strings,” Silvia Rindone, retail lead at EY UK and Eire, stated.

By David Milliken and Suban Abdulla; further reporting James Davey; modifying by William James and Sharon Singleton

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