Soaring inflation forces Brits to tighten belts on groceries as summer clothes, DIY and fuel sales pick up
Brits are still splashing the cash amid soaring inflation, with retail sales estimated to have increased by 0.3 per cent last month off the back of non-food splurging.
The main driver of sales was online, with non-store selling volumes up by 2.3 per cent, while food store sales were down by half of one per cent.
The 0.3 per cent drop comes after a 0.5 per cent increase the previous month, while inflation currently sits at 8.7 per cent.
Millions of Brits went out and bought fresh clothing for the summer as well as DIY equipment to make the most of warmer weather.
According to the figures from the Office for National Statistics, there was ‘anecdotal’ evidence of a rise in spending on takeaway and fast food due to the triple Bank Holiday in May, including the coronation.
Following the Bank of England’s 13th consecutive rate hike on Thursday, the ONS also warned that retailers had indicated concerns about increased cost of living and food prices, which continued to affect sales volumes.
Yesterday, following the rise, governor Andrew Bailey warned the sticky inflation would not go away unless wage increases stopped rising so quickly, while many Brits have been asking for more cash to keep up with rising costs of living.
The figures showed non-food store sales volumes dropped by just 0.2 per cent, after a rise of nearly one per cent the previous month
Sales of petrol and diesel swung back, rising rosing by 1.7 per cent last month in wake of a fall by the same figure in April. The rise as still 9.5 per cent behind February 2020 levels, the the pandemic hit.
Why are Brits buying more clothes, less food?
ONS senior statistician Heather Bovill said: “Retail sales grew a little in May, with online shops doing particularly well selling outdoor goods and summer clothes, as the sun began to shine. May also saw a return to growth for fuel sales after a dip in April.
“Garden centres and DIY stores also saw growth, as the good weather encouraged people to start home and garden improvements.
“These were offset by food sales, which fell back as prices in supermarkets continued to rise, exacerbated by many people ordering takeaways and drinking out more during the extra bank holidays, while jewellery and art also fell back after a strong April.”
Danni Hewson, AJ Bell head of financial analysis explained that a “third bank holiday coupled with a bit of sunshine gave Brits the perfect opportunity to forget their troubles and splash whatever cash they had on summer togs and new kit for the garden.
“The lucky ones might have dipped into savings, whilst many more will have reached for the credit card in order to make the most of not one, but three long weekends.
On the return of fuel sales, “the price at the pump has come down to levels not seen since Russia invaded Ukraine”, leading to a rise. But, “many motorists used the coronation as the perfect excuse to visit friends and family, or finally enjoy a bit of sunshine with a few days at the coast or in a rural beauty spot.
“There was also the little issue of rail strikes which meant those who couldn’t work from home were forced to make alternative arrangements and for some that would have been jumping back in the car.
Hewson added that “retailers and hospitality businesses had already hinted at this consumer resilience with high street giant Next going as far as commenting that pay rises had inspired confidence and that had sent their tills ringing.
“And it’s exactly that resilience the Bank of England has been troubled by. The service sector was largely responsible for keeping the UK economy in positive territory in April and though all those bank holidays are likely to send May’s number in the other direction it’s clear there is still a lot of money being spent.”
Meanwhile, Erin Brookes, European retail and consumer lead at Alvarez & Marsal, said: “The King’s coronation was cause for celebration across the High Street as the extra bank holiday boosted sales in May. With consumers in a festive mood for the once-in-a-lifetime event, and good weather throughout the month, retailers saw elevated demand for outdoor goods and summer clothes.”
“The challenge for retailers will be to continue to attract footfall as the macroeconomic environment worsens. A well-managed blend of newness will drive consumer interest even when demand is weaker, alongside a core assortment to maintain loyalty and drive healthy margins. Summer sales have also begun earlier this year as retailers seek to rotate stock – those who can do this effectively and avoid costly warehousing will emerge as winners.”