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Published
Jun 7, 2017
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Inflation squeezes household budgets in May, non-food retail sales suffer

Published
Jun 7, 2017

Growth in retail sales slowed in May as consumers started cutting their spending on discretionary items due to increase in prices.



According to the BRC- KPMG Retail Sales Monitor for May, like-for-like retail sales fell 0.4% in May compared with an increase of 0.5% in the same month the previous year.

On a total basis, sales rose slightly by 0.2% against a growth of 1.4% in May 2016. This is the lowest since January, excluding Easter distortions, and significantly below the 3-month and 12-month averages (1.9% and 1.2% respectively).

The report shows particularly bad news for fashion and beauty retailers, as like-for-like non-food retail sales dropped 0.3% in May. O a total basis, they increased 0.1%, which is below the 12-month average growth of 0.5% and marks their worst recorded performance since May 2011.

Online sales of non-food products had also a weak month in May, growing only 4.3% compared to a 13.7% rise a year earlier. This is the lowest growth since December 2012.

Over the three months to May, online sales of non-food products increased 7%, while in-store sales declined 1.8%. On a like-for-like basis, in-store sales of non-food products sunk 2.3%.

“Overall, May’s sales slowdown is indicative of a longer term trend of a decline in consumer spending power,” says Helen Dickinson, chief executive of the British Retail Consortium.

“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.”

Paul Martin, UK head of retail at KPMG added that after the surge in retail sales last month, the like-for-like fall in May represents “a more accurate depiction of the state of UK retail currently”.

“Many retailers, particularly fashion stores, will be poised and ready to make the most of the upcoming summer, so hopefully the weather will play fair. An increased focus on managing costs will dominate the retail agenda. More imminently though, eyes will be firmly placed on the outcome of the General Election, with close attention being paid to the implications it might have on the industry.”

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