Shoppers return

Retailers enjoy May uplift as shopper optimism rises

high street shopping at Easter
Shops enjoyed an uplift in May (pic: Terry Murden)

Retailers have seen the quickest pick up in sales for 18 months as consumers enjoy the benefit of a little more spending power.

New data from the CBI shows shop sales grew modestly in the year to May, their strongest since December 2022, though they are expected to fall moderately (-4%) next month.

There is, however, some comfort in the figures which follow cuts to national insurance contributions and the fall in the rate of prices rises as well as lower energy costs.

Inflation fell to 2.3% last month, close to the Bank of England’s 2% target, while a new price cap from July will see energy bills cut. The figures coincide with continuing wage growth which is easing pressure on household budgets.

GfK’s consumer confidence index also shows optimism at its highest point in more than two years years.

Alpesh Paleja, lead economist at the CBI, said: “May’s increase in retail sales adds to the swathe of data pointing to an improvement in activity over the near-term.

“Falling inflation, and continuing real wage growth will contribute to a healthier consumer outlook, in turn supporting the retail sector further.”

The leap in retail sales in May was helped by better weather in the month after heavy rainfall in April, though Scotland has continued to be hit by downpours.

According to the British Retail Consortium total UK retail sales fell by 4% year on year in April, against a growth of 5.1% in April 2023., though the figure was distorted by the early Easter.

When correcting for the holiday weekend, the average growth for March and April together was up 0.2%.

However, Helen Dickinson, chief executive of the British Retail Consortium, said: “Dismal weather and disappointing sales led to a depressing start to Spring for retailers, even accounting for the change in timing of Easter.”

Scotland’s retailers fared worse than the UK average with a similar fall for April but a March-April fall of 2%.

Looking ahead, the CBI said retailers expect sales to fall slightly next month, but to remain broadly in line with seasonal norms. Conditions elsewhere in the sector also appear to be more mixed, with headcount continuing to fall and investment plans weakening further.

Mr Paleja said: “Retailers are restrained about their business situation over the coming quarter. Headline sales are expected to fall moderately next month, and it’s concerning that retailers’ investment intentions have deteriorated noticeably.

“The mixed mood from our survey demonstrates just how nascent the economic recovery is. All parties should use this general election campaign to embrace policies which will embed sustainable growth, foster the investment we need to develop a labour market which delivers higher living standards, and to accelerate our transition to net zero.” 

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