Retail Sales Hit Hard In May As UK To Face ‘Three More Painful Years’


Data released by the Office for National Statistics showed UK retail sales slumped during May. Including fuel, sales volumes fell by 1.4% between April and May, while excluding automotive fuel volumes decreased by 1.6%. These latest figures are a sharp contrast to the strong data seen in April, when sales were helped by warm weather and bank holiday weekends.

Delving deeper into today’s figures, non-store retailing revealed an optimistic picture, with sales volumes growing by 19.0% over the year and sales values by 18.3% – the highest value since the series began in 1988. Meanwhile, the food sector was hit hard, with volumes declining by 3.5% over the year to May. This is a return to a long trend of contraction, after a small increase in April. The clothing sector continues to show weak expansion with sales volumes increasing 1.1% year on year in May, down from 1.5% in the previous month, and well under the monthly average for 2010 of 6.0%.

In conjunction with the current economic conditions, traditional retailers are having to come to terms with the rise in internet retailing. Internet sales are now 9.4% of all retail sales, up from 8.5% in April.

Governor of the Bank of England Sir Mervyn King has warned that the UK economy faces three more painful years. Indeed, data released yesterday from the UK labour market showed that average earnings growth excluding bonuses increased by just 2.0% over the year to April – well under half the current headline inflation figure of 4.5%.

All in all, the current picture of erosions in real disposable incomes is expected to continue for some time and UK retail sales are likely to remain subdued.

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