😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

UK retail sales rebound in May but shoppers still cautious

Published 06/21/2024, 02:13 AM
Updated 06/21/2024, 03:55 AM
© Reuters. People shop on Oxford Street in London, Britain April 10, 2023. REUTERS/Anna Gordon/file photo
JD
-
TSCDY
-

By Suban Abdulla

LONDON (Reuters) -British retail sales jumped sharply last month after heavy rain kept shoppers away in April, official figures showed on Friday, in a minor boost for Prime Minister Rishi Sunak ahead of the July 4 election.

Sales volumes rose 2.9% in May, up from a revised 1.8% fall in April, the Office for National Statistics said.

Economists polled by Reuters had on average forecast sales volumes would increase by 1.5% in May.

Compared to a year ago, May's sales volumes were 1.3% higher, after a revised 2.3% fall in April, but remained 0.5% below their level in February 2020 before the COVID-19 pandemic.

The ONS said yearly sales growth might also be distorted by an extra public holiday in May 2023 to mark King Charles' coronation.

Lisa Hooker, a consumer markets specialist at PwC, said May's sales growth was less strong than it looked at first glance, once the extra trading day, a cut in employee payroll taxes and a rise in the minimum wage were taken into account.

"We would have expected a larger improvement in sales volumes," she said.

British shoppers have been squeezed by high inflation which only returned to the BoE's 2% target last month after exceeding it for nearly three years.

Average wages are now rising faster than inflation and consumer sentiment in June had recovered to its highest since November 2021, according to figures from Britain's longest-running consumer confidence survey earlier on Friday.

The ONS said sales volumes rose across most sectors last month, with clothing retailers and furniture stores rebounding especially strongly following poor weather in April.

The improvement comes after many retailers reported that discretionary spending was under pressure in the first quarter of 2024.

© Reuters. People walk on Regent Street in London, Britain April 10, 2023. REUTERS/Anna Gordon/File Photo

Tesco (OTC:TSCDY), Britain's biggest food retailer, last week reported a strong first quarter. However, sportswear seller JD (NASDAQ:JD) Sports Fashion recently reported a drop in first quarter UK sales, while sofa retailer DFS Furniture warned on profit.

"Although macroeconomic indicators - including interest rates, inflation, and wages are improving - it seems consumers are biding their time, waiting for a more optimistic climate before loosening their purse strings," Silvia Rindone, retail lead at EY UK and Ireland, said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.