We examine the data on retail sales, and the implications for the sector.
Retail sales rose by 0.3% month-on-month (m/m) in May, building on a 0.5% rise in April. May’s outturn leaves retail sales volumes up 1.7% in the year to date. Non-store and automotive fuel sales led the growth in headline retail volumes, boosted by the warm weather and falling petrol prices. Food store sales were the main drag on retail volumes, reflecting the impact of an extra bank holiday (with more people switching to takeaways and fast food) and near-record price inflation in the sector.
The data is the latest in a range of indicators showing an unflagging resilience in consumer spending. This was a feature in the Bank of England’s interest rate deliberations last week, which culminated in a decision to raise Bank Rate by 50 basis points.
However, the outlook for household spending itself is mixed: higher interest rates will push up debt service costs for mortgage-holders later this year, increasing strain on finances. Moreove
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