May retail sales drop at fastest rate since 1995 - BRC

Retail sales fell in May at their fastest rate since 1995 as economic and political uncertainty took their toll, according to the latest figures from the British Retail Consortium, which warned of further job losses and store closures.

Sales were down 2.7% last month on a total basis compared to a 4.1% increase in May last year. Excluding Easter distortions, this marked the biggest decline since the BRC began recording data in January 1995.

On a like-for-like basis, retail sales fell 3% from May 2018, when they rose 2.8% from the previous year. Excluding Easter distortions, this was the steepest LFL drop since December 2008.

Over the three months to May, in-store sales of non-food items were down 2.7% on both a total and LFL basis, versus a 12-month total average decline of 2.4%. Meanwhile, food sales rose 0.8% on a LFL basis and 1.9% on a total basis, coming in below the 12-month total average growth of 2.5%.

BRC chief executive Helen Dickinson said: "With the biggest decline in retail sales on record, the risk of further job losses and store closures will only increase. While May 2018 offered almost unbroken sunshine, topped off by the run-up to the World Cup and the marriage of Meghan and Harry, May 2019 delivered political and economic uncertainty. Food sales dropped for the first time since June 2016, with further declines in clothing, footwear and outdoor goods.

“With retail conditions the toughest they have been for a decade, politicians must act to support the successful reinvention of our high streets and local communities. Business rates remain a barrier, preventing many retailers from investing in their physical space. We have a broken tax system, which sees retailers paying vast sums of money regardless of whether they make a penny at the till, and yet the Government is failing to act. The legislation is falling behind the technological revolution."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the slump in year-over-year growth in total sales is another sign that May was a terrible month for retailers.

"The CBI’s reported sales balance also plunged in May, to a 20-month low of -27, from +13 in April. These year-over-year comparisons, however, have been depressed by the bounce in sales in May 2018 caused by the run-up to the World Cup and the Royal Wedding.

"Households still have the wind in their sails; consumers’ confidence recovered in May to its highest level since September, while disposable incomes were boosted in April by the unusually large increase in the income tax personal allowance. Surveys point to a slowdown in employment growth, but resilient wage gains that should continue to exceed CPI inflation comfortably. At this stage, then, May just looks like one bad month in an otherwise solid year for growth in consumers’ spending."