U.K. Retail Sales Slide Sharply in May, Erasing April Gains
Retail sales in the U.K. fell sharply in May, reversing much of April’s strong performance, with a notable decline in food store sales contributing to the drop.
According to data released Friday by the Office for National Statistics, retail sales dropped 2.7% month-on-month in May. This follows a revised 1.3% gain in April, a figure previously seen as a sign of consumer resilience.
Economists had only expected a 0.5% decline, making May’s fall significantly worse than forecast. The drop reflects sales volumes and is not adjusted for inflation.
On a yearly basis, retail sales declined by 1.3%, after a 5.0% increase in April, which had been fueled by favorable weather and strong footfall in food stores.
Earlier this week, the U.S. also reported a sharp 0.9% drop in retail sales for May, the biggest monthly decline since January, following a downwardly revised 0.1% dip in April. These back-to-back declines have largely undone the gains driven by a tariff-fueled surge in March.
Uncertainty stemming from former U.S. President Donald Trump’s unpredictable trade policy and tariff threats continues to complicate business planning.
Back in the U.K., consumer sentiment improved in June to its highest level since December, though it remained negative overall, according to the British Retail Consortium.
“Gen Z saw the greatest improvement in economic outlook and financial expectations,” said BRC Chief Executive Helen Dickinson.
“This may reflect the April rise in the minimum wage, which likely led to noticeable pay increases for many younger workers. Expectations for future spending, especially on groceries, also ticked up.”
The Bank of England held its benchmark interest rate steady at 4.5% during its Thursday meeting, citing concerns over a softening labor market and elevated energy prices tied to escalating conflict in the Middle East.
“Interest rates remain on a gradual downward path,” stated Governor Andrew Bailey, while emphasizing that policy is not on a fixed trajectory.
“The global environment remains highly uncertain. In the U.K., we’re seeing early signs of labor market weakness, and we’ll closely watch how that affects inflation dynamics.”
