UK retail sales drop sharply in May, a Big miss on expectations

The office for National Statistics (ONS) published the UK’s retail trade report for the month of May, which showed that the UK consumer spending dropped sharply, coming in way below market expectations across the time horizon.

The UK’s retail volumes came in at -1.2% in May m/m, while the annualized retail spending slumped to a meagre 0.9% reading. Markets had estimated a -0.8% contraction on a monthly basis; while a 1.7% reading was expected on yearly basis.

Retail sales excluding volatile items such as fuel also disappointed markets, arriving at -1.6% m/m and 0.6% y/y.

Main points

In May 2017, the quantity bought in the retail industry was estimated to have increased by 0.9% compared with May 2016; the annual growth rate was last lower in April 2013.

Non-food stores were the main contributing factors to this slowdown with an annual fall of 1.2% and predominantly food stores saw the lowest annual growth since July 2013 at 0.1%.

Month-on-month, the quantity bought was estimated to have fallen by 1.2% following strong growth in April 2017.

The underlying pattern, as measured by the 3 month on 3 month change showed growth of 0.6% in May 2017.

Average store prices (excluding fuel) increased by 2.8% on the year; the largest growth since March 2012.