A disappointing month for supermarkets saw UK retail sales fall sharply in May, marking the biggest monthly decline since December 2023. Sales volumes fell by 2,7%, reversing a positive trend seen in April (+1,3%), which was supported by sunny weather then, according to the Office for National Statistics (ONS).
In particular, food retailers reported a decline in alcohol and tobacco purchases, a clear sign of households reining in spending. Clothing and home goods stores also reported “sluggish trading,” while sales of do-it-yourself products declined, likely because many consumers had already completed household chores in the previous months thanks to favorable weather.
Despite the negative monthly data, in the March-May quarter sales volumes still showed a 0,8% increase compared to the previous three months, an indicator considered more stable for capturing underlying trends.
Price increases continue to weigh on consumer confidence. Annual inflation remained at 3,4% in May, with food prices rising for the third consecutive month. Of those reporting an increase in the cost of living, rising food prices were the most cited factor, according to the ONS.
Meanwhile, parallel macroeconomic data showed the UK recorded government borrowing of £17,7bn in May, the second highest for this month since monthly records began in 1993. This was £700m higher than in May 2024, partly due to inflationary adjustments to social benefits, which have caused spending to rise faster than tax revenues.
Hannah Finselbach, senior statistician at the ONS, said May’s weak result was largely attributable to the difficulties of supermarkets, while Paul Dales, chief economist at Capital Economics, warned that “the wave of economic growth at the start of the year may already be over”.
Jacqueline Windsor, head of retail at PwC UK, added: “The decline in retail sales is not surprising given the exceptional performance in April. But it highlights once again the fragility of consumer spending power and the vulnerability of the retail sector in the current economic climate.”
