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U.K. Retail Sales Fall by 0.5% in May

·2 min read

By Scott Kanowsky

Investing.com -- U.K. retail sales volumes dropped by 0.5% in May, reversing course from a rise of 0.4% in the previous month, according to data from the Office for National Statistics.

The decline was mainly due to slowing food store sales, which fell by 1.6% during the month, a sign that inflation concerns may be taking a bite out of consumer demand.

"[R]educed spending in food stores seems to be linked to the impact of rising food prices and the cost of living," the ONS said.

On a year-to-year basis, retail sales volumes were also 4.7% lower.

The ONS said sluggish food store demand was partially offset by an uptick in automotive fuel sales, which moved higher by 1.1%. It added this rise may be partly linked to an increase in hybrid working and a slowdown in people working exclusively from home.

Overall, May's downturn in retail sales was less than expected. Analysts had estimated a fall of 0.7% month-on-month. Total sales were also 2.6% above pre-pandemic volumes in February 2020.

The data comes as worries are growing in the U.K. that rising prices may lead to a wider cost of living crisis. Britain's inflation rate hit a fresh 40-year high of 9.1% in May, and the Bank of England has predicted that that figure could climb above 11% later this year. The BoE has moved aggressively to try to tamp down these higher costs, raising interest rates by 25 basis points at its latest meeting and hinting at further hikes in the future.

However, the overall downturn in retail sales was less than expected. Analysts had estimated a fall of 0.7%.

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