UK retail sales fall as price rises force people to cut food shopping

·Finance Reporter, Yahoo Finance UK
·4 min read
UK retail: sales at supermarkets fell by 1.5%. CARDIFF, WALES - MAY 22: A woman with a shopping trolley full of groceries in a supermarket aisle on May 22, 2022 in Cardiff, Wales. Last week, the UK Office for National Statistics reported an 6% average increase of food and drink prices year on year, but some staples, such as milk and pasta, had risen by more than 10%. (Photo by Matthew Horwood/Getty Images)
UK retail: sales at supermarkets fell by 1.5%. Photo: Matthew Horwood/Getty

UK retail sales dropped in May as squeezed households cut back on food spending amid spiralling prices.

Retail sales volumes across Great Britain fell by 0.5% in May from April, driven by a slump in food sales which dropped 1.6%, according to the Office for National Statistics (ONS).

Heather Bovill, deputy director for surveys and economic indicators at the ONS, said: “Feedback from supermarkets suggested customers were spending less on their food shop, because of the rising cost of living.”

The ONS revised down sales growth in April, from the previous estimation of 1.4% to an increase of 0.4%.

The data also revealed that fuel sales jumped by 1.1% in May, which was likely driven by an increase of workers returning to offices, according to the ONS.

Read more: UK inflation hits fresh 40-year high of 9.1%

Helen Dickinson, chief executive of the British Retail Consortium (BRC), said: “Households reined in spending as the cost of living crunch continued to squeeze consumer demand.

“Many customers are buying down, particularly with food, choosing value-range items where they might previously have bought premium goods.

“High-value items, such as furniture and white goods, were also impacted as shoppers reconsidered major purchases during this difficult time.”

She added: “Higher operational and input costs have filtered through to prices, meaning both retailers and their customers are in for hard times ahead.”

Prices overall are continuing to rise at their fastest rate for 40 years, with UK inflation at 9.1%, the highest level since March 1982.

Inflation in the UK is at record high levels
Inflation in the UK is at record high levels. Chart: Yahoo

Sales at supermarkets fell by 1.5%, while sales of tobacco, alcohol and other drinks dropped 4%. Non-food store sales were unchanged, with a 2.2% increase in clothing sales offset by a 2.3% decline in household goods.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Squeezed shoppers tightened their belts in May, as the horror of April’s rising bills swallowed a much bigger slice of their income, and kept their appetite for spending under control.

“Over the coming months, we can expect to see more weakness spread throughout the sector. It’s not just the rising bills of today that are worrying us, it’s the prospect of even higher bills tomorrow, and fears of a looming recession, which might cause our finances to unravel entirely.”

The ONS said that 46% of adults said they had seen the cost of shopping increase above usual over the past two weeks, representing a sharp jump in the cost of living after only 18% of shoppers reported increased spending when asked in October last year.

The figures show that 91% of Britons saw a rise in the overall cost of living over the period to June 19 as food, energy and fuel all weighed on shoppers.

Maxim Syn, head of desk at global financial services firm Ebury, said a “triple whammy” of rising energy prices, spiralling food prices and a hike in national insurance in April all dampened demand.

He said: “Food prices in particular have seen big increases with Wednesday’s inflation figures showing food was the biggest contributor with bread, cereals and meat seeing the largest upticks.

“This is down to rising wholesale food prices and the cost of raw materials.”

Read more: Average UK food shop rises by £380 a year

The drop in food sales comes as a long-running measure of consumer confidence recorded its lowest score since records began in 1974.

Danni Hewson, AJ Bell financial analyst, said: “The latest retail sales figures won’t tell anybody anything they don’t already know, but they do provide an interesting snapshot into how consumers are wrestling with inflation.

“Quite simply they’re buying less of pretty much everything, from food to furniture. At supermarket checkouts people are setting limits, own brands are replacing big name favourites and shoppers are trading down in the hopes of getting a little more for a little less.

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