UK Retail Sales Beat Expectations in May
UK retail sales increased more strongly than expected in May, supported by warmer weather and promotional offers from retailers.
However, concerns about the war in Iran and its potential impact on the cost of living continued to create uncertainty for British consumers.
According to the Office for National Statistics, retail sales volumes rose by 1.2% in May after declining by 1% in April. Economists surveyed by Reuters had expected a smaller monthly increase of 0.5%.
Annual Retail Sales Growth Accelerates
Compared with May last year, UK retail sales volumes increased by 3.2%. This was significantly higher than economists’ forecast of 1.9% annual growth.
When petrol sales were excluded, retail volumes also rose by 1.2% compared with April. On an annual basis, sales excluding petrol climbed by 4.6%.
Warm Weather and Promotions Support Spending
Sandra Prince, head of consumer at Lloyds Bank, said warmer weather and the half-term holidays encouraged more people to go out and spend money during May.
Clothing stores and online retailers recorded particularly strong demand. Nevertheless, consumers remained cautious and continued to make more selective purchasing decisions.
Retailers have attempted to protect customers from rising costs by offering discounts and placing greater emphasis on value. Businesses will now hope that the upcoming summer shopping season and the World Cup can help maintain the recent sales momentum.
Consumer Confidence Remains Under Pressure
A separate survey released on Friday showed that UK consumer confidence remained unchanged in June.
However, younger consumers became the least optimistic they had been in two years about both the economy and their personal finances. Households were also less willing to make major purchases than at any point since January 2025.
Iran Conflict Creates Retail Uncertainty
Major UK retailers have warned that the continuing conflict in the Middle East is creating uncertainty for consumers and businesses.
Although US President Donald Trump’s interim agreement with Iran provided some optimism, retailers are continuing to monitor how the situation could affect operating costs and household spending.
Supermarket groups Tesco and Morrisons have both reported slower sales growth since the conflict began.
Tesco said favourable weather conditions would probably provide a greater boost to sales than strong performances by England and Scotland at the men’s football World Cup.
