Belfast Telegraph

Online retail sales suffer as election fears and rising inflation hit spending

UK online retail sales have suffered their lowest growth rate in more than 18 months as the General Election and rising inflation took their toll on consumer spending, figures suggest.

Online sales were up 10.2% year-on-year in May, the lowest growth rate recorded by the IMRG Capgemini e-Retail Sales Index since October 2015.

Clothing suffered particularly badly with growth of just 7.6% - the lowest figure for May recorded by the index.

The gifts sector was at its lowest growth rate since 2009 for May, at 5.5%, while electricals experienced a dip in growth at minus-8.6%, the only negative year-on-year change the sector has seen for the month since tracking began in 2003.

The report noted that the months preceding an election tended to see a lower rate of growth than the equivalent months in non-election years.

However, rising costs may also be having an impact, with the latest ONS figures showing that inflation grew to 2.9% in May.

Capgemini consultant Bhavesh Unadkat said: "As spending warms up with the start of summer, May and June are usually two of the strongest months of the year.

"With ongoing economic and political uncertainty, however, this month's results show a clear reversal of that trend.

IMRG editor Andy Mulcahy said: "Shopper confidence tends to take a hit just before an election so, while the fact we were actually having a General Election may have been a surprise, a drop in online retail sales growth preceding it is not.

"Growth usually rises again soon afterwards - even in July 2016, the month after the Brexit vote and all the uncertainty that came with it, sales were up 18.6%.

"The issue this time is that we now have a hung parliament, which leaves all political options still available, including the potential for yet another general election in the near future. 2017 is certainly turning out to be a very challenging year for retailers to navigate."