Retail figures: Food offers give sales 2.1% rise for May

 

Supermarket offers on food helped drive retail sales higher than expected last month, adding to signs of optimism over consumer spending.

Retail sales volumes increased 2.1 per cent in May month-on-month - significantly ahead of economists' hopes for a 0.8 per cent increase - as sales rebounded from an unseasonably cold April.

Much of the sales uplift came from food stores, the Office for National Statistics (ONS) said, as supermarkets lured in shoppers with promotions and discounts.

Buoyant retail sales will add to signs of recovery in the economy, fuelling hopes the UK's output can grow by 0.5 per cent in the second quarter.

Martin Beck, UK economist at Capital Economics, said the figures are "further evidence that a recovery in the UK economy may be taking root".

Alan Clarke, fixed income strategy director at Scotiabank, said the UK was on a "food binge" in May.

"This volatility in retail sales is all about food," he said. "Either there was a big influence from the poor weather, the timing of Easter caused some distortions or the whole country was on a crash diet in April that was then reversed in May."

The amount of food bought increased by 3.5 per cent month-on-month, the ONS said, while sales of clothes, shoes and textiles rose 1.4 per cent on the month. Sales of household goods increased 0.7 per cent month-on-month.

The ONS added almost all store types reported a rebound in sales from April, which was hit by unseasonably cold weather.

It said: "Feedback from retailers suggested that promotions on summer ranges led to this increase in sales."

Compared with a year earlier, retail sales volumes in May were up 1.9 per cent, as shoppers bought the biggest quantity of retail goods on record.

The amount spent on retail goods also rose 2.1 per cent month-on-month and was up 3.1 per cent on a year earlier.

Internet sales continued to soar, the ONS added, with spending increasing 10.3 per cent on a year earlier. Online sales now account for 9.7 per cent of retail spending.

Recovering consumer spending will fuel hopes the UK's dominant services sector can continue to drive growth and will add to Chancellor George Osborne's assertion last night that Britain is "moving from rescue to recovery".

David Tinsley, UK economist at BNP Paribas, said: "Overall, the figures today are consistent with a fairly solid quarterly gross domestic product (GDP) figure for the second quarter.

"The question is whether this momentum can be sustained into the second half of the year. We remain concerned economy-wide real income growth will not be sufficient to see this, though for now the UK is having a good run."

British Retail Consortium director general Helen Dickinson said optimism is gradually returning to the sector.

She said: "UK retailers have had to work hard to respond to the volatile weather and economic challenges, but the signs are that their promotional activity has been paying off.

"Customers remain price-conscious, but have been responding well to the good deals that are available."

PA

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