Retail sales volumes fell by 0.5% in May 2022 according to the latest figures from the Office for National Statistics (ONS), as consumers started to cut back on household spendign amid the cost of living crisis.
According to the ONS, customers have reportedly begun switching away from purchasing household goods (down 2.3%), while furniture stores and department stores were down 1.1%.
May also saw a drop of 1.6% in food sales and the ONS expects the economy to contract by 0.5% in Q2.
In addition, the proportion of retail sales online also fell to 26.6% in May 2022 from 27.1% in April.
Commenting on the figures Jacqui Baker, partner and head of retail at RSM UK, said: “May was the first month that households felt a pinch in their bills. Consumer confidence falling to a record low, won’t come as good news for retailers who are relying on people to spend. It’s no secret that consumers are feeling the pressure with higher energy bills in full flow and the cost-of-living crisis chipping away at household budgets. For many, spending will become increasingly dominated by the essentials, as opposed to luxuries.
“Despite this, in preparation for the summer holidays and events such as the Jubilee weekend, consumers took the opportunity to buy new outfits with clothing sales up 2.2% in May. It’s likely this will continue to be a key trend during the summer months, with more people switching away from purchasing household goods (down 2.3%), to spending on holidays and social events instead.”
Thomas Pugh, economist at RSM UK, added: “The drop in retail sales in May is another indication, along with the slump in the S&P/CIPS composite PMI and collapse in consumer confidence, that the economic contraction which occurred in March and April, continued in May.
“The surge in inflation and subsequent slumps in households’ real incomes and consumer confidence doesn’t bode well for retail sales over the next year. However, the silver lining is that total spending is still rising. This suggests that consumers are still willing to go out and spend, but they just aren’t getting as much for their money.”