Retail sales in Great Britain unexpectedly fell in May for the first time since January, as people spent more on hospitality and less on grocery shopping in the wake of lockdown restrictions easing, according to new data.
Food store sales suffered because “consumers took advantage of eating out” following the reopening of pubs, bars and restaurants, said Darren Morgan of the Office for National Statistics.
The volume of monthly retail sales fell 1.4 per cent, ONS data published on Friday showed, countering forecasts from economists polled by Reuters that predicted a 1.6 per cent increase.
The decline followed a jump of almost 10 per cent in April, when non-essential shops were allowed to reopen for the first time since early January in most parts of the UK.
Meanwhile, household goods stores and garden centres fared well, with people spending in anticipation of the summer and the lifting of restrictions on outdoor gatherings, said Morgan.
Adverse weather “was another unfortunate blow for the high street,” said Aled Patchett, head of retail and consumer goods at Lloyds Bank, adding that the government’s decision to extend Covid-19 restrictions by four weeks “will continue to apply pressure to high street models” particularly if the spread of new variants dampens footfall.
The May decline was driven mainly by food stores, with sales falling 5.7 per cent, while alcohol and tobacco retailers reported a decline of 8.4 per cent, reflecting the reopening of indoor service in bars and pubs on May 17.
Clothing and department stores registered monthly declines, after a record expansion the previous month.
Non-food stores, in contrast, reported strong growth with household goods shops, such as furniture, registering a 9 per cent rise in sales. Chemists, toy and sports equipment sellers followed the trend.
Automotive fuel sales grew strongly, continuing the recovery in April, driven by a rise in road travel.
Online retail remained strong accounting for 28.5 per cent of all sales, around 10 percentage points higher than before the pandemic, suggesting some permanent shift to internet shopping.
Lynda Petherick, retail lead for Accenture UK, said: “Brands who haven’t reflected this shift in their plans will find themselves lagging behind more forward-thinking peers.”
Despite falling back, retail sales volumes were still 9.1 per cent higher than they were in February 2020, before the pandemic began.
“The soft retail sales data could mean May wasn’t as strong for the economy as we had thought,” said Paul Dales, chief UK economist at Capital Economics.
Economists also warned that household spending would lose momentum in the months ahead as the government furlough scheme tapers out and inflation rises.
James Smith, economist at ING, said consumer spending will probably push gross domestic product back up to or around pre-Covid levels by the end of the year but “retailers, particularly physical stores, may not feel the full benefit of the pent-up demand story as consumers pivot back to spending on services”.