Key facts
- UK retail sales volumes rose 1.2% in May, exceeding the 0.5% forecast.
- Year-on-year sales volumes increased 3.2%, surpassing the 1.9% expectation.
- Warmer weather and retailer promotions contributed to the sales increase.
- April's sales decline was revised to a smaller 1.0% drop.
- Consumer confidence remained steady in June but younger demographics showed less optimism.
- Major retailers noted a sales growth slowdown due to the Middle East conflict.
British retail sales volumes saw a stronger-than-expected increase of 1.2% in May, according to official figures released by the Office for National Statistics (ONS). Economists had largely anticipated a more modest monthly rise of 0.5%. On an annual basis, sales volumes grew by 3.2%, also surpassing the consensus forecast of 1.9%.
The positive retail sales data was attributed to warmer weather and retailer promotions, which encouraged consumers to spend, particularly in clothing and online sectors. Retailers are actively using promotions to maintain competitive pricing despite ongoing cost pressures. April's monthly sales decline was revised to a smaller 1.0% drop.
However, consumer confidence remained steady in June, with younger demographics expressing less optimism about the economy and their personal finances. Households also showed a reduced willingness to make large purchases. Major British retailers continue to monitor the impact of the Middle East conflict on consumer behavior and costs, with supermarket groups like Tesco and Morrisons reporting a slowdown in sales growth since the conflict began.
Britain's economy contracted in April, but the Bank of England has nudged up its forecast for underlying quarterly growth to 0.2%. The central bank held interest rates at 3.75% but two policymakers voted for a hike. Separately, Britain's budget deficit in May was larger than expected.