UK retail sales fall as cost-of-living squeeze tightens

Sales slid in May as rising food prices and the cost-of-living crisis hurt consumer spending

Souvenirs for sale in Oxford Street, London. UK retail sales fell by 0.5 per cent in May. EPA

Retail sales fell by 0.5 per cent in May in a further sign of how much surging inflation is hitting the economy, according to official figures.

Consumers reined in their grocery spending amid belt-tightening as a result of the cost-of-living crisis, the Office for National Statistics (ONS) said.

Economists had expected a decline of 0.7 per cent.

The drop in retail sales over the month came after sales tumbled 1.6 per cent across food stores.

The ONS also revised down sales growth in April, from the 1.4 per cent previously estimated to an increase of 0.4 per cent.

The data also revealed that fuel sales jumped by 1.1 per cent in May, which it said was probably driven by an increase in workers returning to offices.

Inflation in the UK hit an annual rate of 9.1 per cent in May, data showed on Wednesday, a new 40-year high, after broad increases in the cost of everything from fuel and electricity to food and beverages.

Heather Bovill, deputy director for surveys and economic indicators at the ONS, said: “Retail sales fell in May driven by a decline in food sales.

“Feedback from supermarkets suggested customers were spending less on their food shop because of the rising cost of living.

“More workers returning to the office may have contributed to increased fuel sales this month while shoppers buying outfits for summer holidays helped boost clothing sales.

“These rises were offset by falls for household goods and department stores, with retailers in these areas reporting consumer reluctance to spend due to affordability worries and higher prices.

“The proportion of online sales slipped back in May but remain substantially higher than before the pandemic.”

A separate report from GfK earlier on Friday showed consumer confidence dropped to a record low this month as surging prices, a squeeze on incomes and disruption from strikes took a toll on the national mood.

The Confederation of British Industry, meanwhile, said on Thursday that retailers were also expecting a poor July as inflation eats away at consumers' willingness to spend.