º£½ÇÊÓƵ high streets experienced a post-Easter slump in shopper numbers, with official data revealing a 2.7 per cent drop in retail sales for May.
The Office for National Statistics reported that this decline in sales for May marked the largest month-on-month decrease since December 2023, as reported by .
Contrary to a Bloomberg poll of economists which predicted a 0.5 per cent drop in retail sales.
The impact of Chancellor Reeves' tax increases was felt by Brits as food store sales saw a five per cent decrease, the most significant percentage drop across all retail sectors.
Sales of household goods and clothing also declined, falling by 2.5 per cent and 1.8 per cent respectively.
Online retail sales followed suit, decreasing for the second consecutive month, with clothing and footwear experiencing a 3.1 per cent drop.
These recent results will undoubtedly cause concern among major retailers, given the apprehension surrounding how increased employers' national insurance contributions (NICs) will impact prices in the upcoming months. Additionally, substantial changes proposed in the Employment Rights Bill are expected to impose further costs on high street shops, potentially discouraging shoppers from making purchases.
Kris Hamer, the British Retail Consortium's director of insight, commented that the dip in consumer demand comes at a "particularly bad time", considering retailers are still grappling with additional costs introduced in April.
"Some non-food categories such as fashion and footwear had a particularly poor month, and beauty sales also continued to come down after a consistently strong period of growth last year," said Hamer.
"The future of business rates reforms is still unclear, but it is vital that it does not result in any shop paying more."
"Otherwise, many retailers could be forced to shut down stores, which will impact jobs and local communities, and ultimately the º£½ÇÊÓƵ's economic growth."
Retail sales drop
Paul Dales, chief º£½ÇÊÓƵ economist at Capital Economics, suggested the latest figures were indicative of a more worrying trend in the º£½ÇÊÓƵ economy.
"The sharp 2.7 per cent month on month drop back in retail sales volumes in May adds to other evidence that the burst of economic growth in the first quarter is over," Dales stated, referencing GDP growth of 0.7 per cent in the first three months of the year.
"Even if sales were flat in June, they would decline by 0.3 per cent in the second quarter as a whole after the 1.6% quarter-on-quarter increase in the first quarter."
"What's more, the recent news on non-retail consumer activity has been patchy. Our forecast is that the 0.2 per cent quarterly rise in real consumer spending in the first three months of the year will be followed by a 0.4 per cent quarterly gain, but that now looks a little more doubtful."
