UK retail sales growing despite monthly dip

Thursday 19 June 2014 12.10
UK retail sales down 0.5% in May, but up 1.3% in the latest three month period
UK retail sales down 0.5% in May, but up 1.3% in the latest three month period

UK retail sales dipped last month for the first time since January but are still enjoying the longest period of sustained growth since before the recession, official data showed. 

Volumes were down 0.5% compared with April - as expected - following a strong Easter, despite a boost in sales at sports stores ahead of the World Cup.

But the figures from the Office for National Statistics (ONS) showed sales in the latest three months were up 1.3% on the previous period.

The ONS said this was the 15th consecutive month of quarter-on-quarter improvement - the longest stretch of expansion since November 2007.

Volumes were up 3.9% year-on-year, the figures showed. Meanwhile the amount spent online increased 1.5% over the month and 15.1% compared with May last year.

However, one economist said much of the retail sales growth was driven by aggressive discounting, pointing to data showing store prices were down 0.7% on the year in May.

The figures also revealed that medium-sized retailers were doing less well. While larger and smaller companies increased sales by value year-on-year, those with 40 to 99 employees saw a 19.2% fall.

Overall in May, £27.8 billion was spent in the UK retail industry, equivalent to £7 billion a week, but average prices in non-food stores, which include clothing retailers, were down. 

Markit chief economist Chris Williamson said that despite falling in May after an Easter holiday-related surge in April, retail sales are growing at an impressive pace so far this year. 

"With sales up some 4.3% on last year during the first five months of 2014, retailers are enjoying the best start to a year for a decade," he added.

But he said the figures showed this was "being generated to some extent by intense price competition which bodes ill for profit margins", backing up the need for continued low interest rates.