Retailers across the UK could be forgiven for saying a prayer of thanks to the weather gods today.
The emergence of sunshine following April’s wash-out was credited by the Office for National Statistics (ONS) as new figures showed retail sales returned to growth in May.
The ONS reported that retail sales volumes increased by 2.9% in May after falling by 1.8% in April. Sales volumes rose across most sectors in May, with clothing retailers and furniture stores rebounding following the poor weather of the previous month.
More broadly, sales volumes increased by 1% in the three months to May 2024 when compared with the previous three months, the ONS found. However, they fell by 0.2% when compared with the three months to May 2023.
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Commentators said today that there are grounds to believe sales will continue to increase if inflation cools, highlighting the opportunity brought by a summer of sport which includes Euro 2024 and the Olympics in Paris.
Official figures published on Wednesday showed inflation slowed to 2% in May, bringing it back in line with the Bank of England’s target for the first time in three years.
However, some commentators cautioned that inflation may yet rise again this year, citing concern over “hot” wage and services inflation. Such concern is likely to have come into the thinking of the Bank of England, which kept interest rates unchanged at 5.25% this week; a rate rise is not now expected until August or September.
“After April’s rainfall put a dampener on the previous month’s results, there will have been relief that retail sales recovered somewhat in May,” said Lisa Hooker, leader of industry for consumer markets at accountancy giant PwC UK. “Headline sales volumes increased by 2.9% compared to April, when they fell by a revised 1.8%.
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“However, in line with other industry reports, the picture is less rosy compared with May 2023. With an extra trading day in 2024 compared to 2023, when there was an additional Bank Holiday for the King’s Coronation – and the first full month benefit of higher national living wage and lower national insurance – we would have expected a larger improvement in sales volumes."
Charlie Huggins, manager of the quality shares portfolio at Wealth Club, said the growth in sales across every category in May “suggests the weather gods were mainly to blame for April's weak showing, and not anything more sinister”.
Mr Huggins noted: “Moderating inflation and a healthy jobs market mean consumers are still spending, despite interest rates having remained higher for longer. With rates widely expected to be cut later this summer, this could inject a further boost of optimism.
“Following April's weakness, retailers up and down the country will be breathing a sigh of relief. There is nothing in May's retail figures to suggest consumers are cutting back. In fact, one could even go as far to say that the consumer is in fine health.”
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