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Retail sales cool as cold weather puts off shoppers

By Abigail Townsend

Date: Thursday 20 Jun 2019

Retail sales cool as cold weather puts off shoppers

(Sharecast News) - UK retail sales eased in May, as unseasonably cold weather saw shoppers delay buying summer clothes.
According to the Office for National Statistics, monthly retail sales volumes decreased by 0.5% overall, in line with consensus, with clothing and footwear sales slumping 4.5%. Year-on-year growth of 2.3%, compared to 5.1% in April, was below consensus, with most analysts looking for around 2.7%. It was also the smallest annual rise since October.

Across the three months to May, retail sales grew by 1.6%. All sectors reported growth except for department stores and household goods specialists. Department store sales fell 0.9% during the period, and household goods by 0.3%.

Rhian Murphy, head of retail sales at the ONS, said: "Retail sales continued to grow in the latest three months despite two consecutive monthly falls, with clothing sales declining considerably in May, due to unseasonably cold weather.

"We see quite a mixed picture across the rest of the sector as the decline in department stores sales continued, with no growth since September of last year."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The further drop in retail sales in May can be attributed to usual volatility, rather than signs of an emerging consumer slowdown. Month-to-month declines in sales volumes of 0.1% in April and 0.5% in May have reversed only half of March's jump. Even if volumes hold steady in June, they will rise by 0.5% on a quarter-on-quarter basis in the second quarter.

"Fundamentally, households currently have the means to spend more, now that year-over-year growth in average weekly wages is sustainably exceeding 3% and inflation is back at the 2% target.

"So provided a no-deal Brexit is avoided, we continue to think that growth in households' spending will remain brisk in the second half of this year."

Emma-Lou Montgomery, associate director for personal investing at Fidelity International, said: "Considering we are facing a summer of political upheaval and ongoing Brexit uncertainty, it seems only logical that consumers are being cautious.

"On the other hand, inflation appears to have settled, mitigating concerns that it would be on the rise again, and last week's earnings data showed wages are rising, all of which give some hope for the current state of the economy."

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