Belfast Telegraph

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Retail sales down as consumers start to feel the pinch amid rising inflation

Retail sales sunk last month and online trading hit record lows as shoppers tightened their belts in the face of rising inflation, new figures have shown.

The latest British Retail Consortium - KPMG report found that like-for-like retail sales dropped by 0.4% in May, down from 0.5% growth last year.

Online sales of non-food products also slumped to the lowest level since records began in 2012, growing by 4.3% last month compared to a 13.7% jump in 2016.

However, food sales reached their highest level in more than five years at 3.2% for the three months to May. Sales of food and drink were boosted by the warm weather in the run-up to the May bank holiday, with double-digit growth in beer, wine and spirit sales.

Paul Martin, UK head of retail at KPMG, said retailers had been "brought back down to earth with a thump" after April's sales surge due to the timing of the Easter holidays.

He said: "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.

"With inflation continuing to rise and wage growth stagnating, consumers are starting to feel the pinch - although the highly competitive nature of the UK grocery market continues to play out in the consumer's favour.

"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."

Inflation hit its highest level for nearly four years in April at 2.7%, tightening the squeeze on consumers, which are already struggling due to low wage growth.

The Office for National Statistics (ONS) announced in May that household spending hit 0.3% in the first three months of the year, eking out its lowest quarter-on-quarter growth since 2014.

However, the warm weather helped retail sales outstrip expectations to rise by 2.3% month-on-month in April, according to the ONS.

BRC chief executive Helen Dickinson added: "Underneath the headlines, there's continued variation in the performance of food versus non-food products, as sales performance of the two become increasingly polarised.

"Food sales, albeit positively distorted by inflation, continue to see annual growth, while in non-food categories, which are predominantly capturing discretionary spending, retailers find themselves having to compete even harder."

Separate figures from Barclaycard showed consumer spending growth had fallen to a 10-month low of 2.8% in May, as shoppers spent more money on experiences over goods.

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