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Retail sales record surprise fall in May

·2-min read
M&S store
M&S store

Britons put socialising ahead of shopping last month after a surprise fall in retail spending, official figures showed.

Sales fell 1.4pc last month - a stark contrast with April's 9.2pc surge as shops reopened - after the return of eating out hit food sales, the Office for National Statistics said.

The 5.7pc slide in food sales offset pockets of strength elsewhere including a 9pc jump at furniture and hardware stores as Britons rushed to snap up garden furniture for outdoor entertaining.

May's figures were lower than expected but shoppers still have an estimated £200bn in pent-up savings to spend following three pandemic lockdowns.

Over April and May combined, average sales were still 7.7pc ahead of March, and were 9.1pc above pre-Covid levels.

Darren Morgan, the ONS's director of economic statistics, said: “Food stores sales suffered as feedback suggested the reopening of hospitality meant consumers took advantage of eating out instead.

"Household goods stores and garden centres fared well as people spent money on improving their gardens in anticipation of the summer and the lifting of restrictions on outdoor gatherings."

The share of online spending dropped to 28.5pc, falling for the third month running. But the overall share of spending online is still well ahead of the 19.9pc reported in February 2020, while the value of spending is almost 60pc higher.

The figures contrast with British Retail Consortium data showing a 10pc surge in sales last month compared to May 2019, while Barclaycard data also showed a 7.6pc rise in spending.

Paul Dales, chief UK economist at Capital Economics, said the figures were "disappointing" but added: "It may not mean that overall consumer spending is much weaker than we have been expecting if there was just a bigger shift in spending from the shops to the pubs as indoor hospitality reopened in mid-May."

While April's retail spending surge added 0.5 percentage points to the UK's overall 2.3pc growth during the month, May's figures would drag on growth, he added.

The Bank of England expects consumers to spend some 10pc of their pandemic savings this year. The CBI business group meanwhile expects consumer spending to drive an 8.2pc growth spurt in 2021, returning the economy to pre-Covid levels of output by the end of this year.

But economists warned that retail spree could wane as pandemic support measures such as the furlough job protection scheme and the £20 a week rise in Universal Credit are withdrawn later this year.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "We continue to think that the recovery in households’ spending will lose momentum as it approaches its pre-Covid level later this year.

"Households’ real disposable income looks set to fall in the fourth quarter, as the end of the furlough scheme reduces employment and inflation rises to match wage growth."

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