The unpredictable British weather played a pivotal role in May’s retail landscape, as shoppers emerged from their homes under blue skies and a more optimistic meteorological forecast. After April’s heavy showers kept consumers indoors, UK retail sales rebounded significantly.
- May’s Sales Surge: Sales volumes surged by 2.9% in May, a stark contrast to the revised 1.8% decline in April. This positive momentum exceeded economists’ expectations, who had anticipated a more modest increase of 1.5%.
- Year-on-Year Comparison: Compared to the same period last year, May’s sales volumes were 1.3% higher. This followed a revised 2.3% fall in April. The Office for National Statistics (ONS) noted that an additional public holiday in May (for King Charles III’s coronation) may have influenced the growth.
- Broad-Based Strength: Andrew Wishart of Capital Economics highlighted that the strength in sales was widespread across the retail sector, including online sales (+5.9% month-on-month). This suggests underlying resilience beyond weather-related effects.
- Inflation and Consumer Confidence: Falling inflation and improved consumer confidence contributed to stronger spending. As long as inflation remains stable, the possibility of an interest rate cut in August looms, although the pace of subsequent rate cuts will depend on economic activity.
- Weather’s Impact: Danni Hewson, head of financial analysis at AJ Bell, emphasized the significant influence of weather on consumer behavior. Falling inflation has given people more confidence to spend, but unpredictable weather patterns remain a wildcard for retailers. As the saying goes, “Fix the roof while the sun shines”—a wet summer could alter the economic landscape.
SOURCE: Ref Image from The Telegraph
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