As per the British Retail Consortium, on Tuesday it was revealed that sales growth in retail declined to a seven-month low in May as surging food prices prompted consumers to spend less on non-essential items, sabotaging the hopes of boosting sales from three public holidays.
The BRC revealed that, in comparison to a year ago, expenditure at its members’ stores surged 3.9% last month in yearly terms, a significant gain. Sales fell short of April’s 5.2% increase, though.
Retail sales growth in May was the lowest it had been since October 2022, when it was 1.6%. At that time, customers had cut back on their purchases as inflation surged to a 41-year high of 11.1%. Since the BRC numbers are not inflation-adjusted, May’s sales gain shows a decline in the volume of goods purchased.
Due to surging prices and celebrations marking King Charles’ coronation, food was nearly the only category in which people spent extra money last month.
As per the head of retail accounting in the UK, Paul Martin’s data: “The wild card for the retail sector remains uncontrollable food inflation, which shows little sign of coming down in the near future, and this is having a significant knock-on effect on non-essential spending.”
As per the official data, consumer price inflation dropped less than anticipated in April; however, prices of food remained at a 46-year high of 19.1%, increasing market bets on an interest rate high of 5.5 percent later this year.
The Bank of England raised interest rates from 4.5% in June 2022 to 4.75% and said that it would continue to raise rates if inflation persisted.
The BRC stated that, down from a 5.2% gain in April, retail sales were up 3.7% year over year in May on a like-for-like basis, a metric used by equities analysts that takes changes in shop space into account.
Separate data released by Barclays on Tuesday revealed that consumers’ purchasing power continues to be diminished because of high inflation and rising food prices.
Barclays revealed that consumers increased card payments by 3.6% year-on-year in May, including an 8.9% increase in groceries. Since February 2021, when it stood at 27.0%, this category has had its greatest increase.
Barclays economist Silvia Ardagna stated: “Although the latest headline figures show that inflation has fallen due to lower energy prices, the prices of core services and goods remain stubbornly high and continue to constrain real household disposable income and spending.”
- Published By Team Timeswire