May proved to be another miserable month for retail, as cash-strapped Brits said no to treating themselves in the face of rising bills and unfavourable weather.
Spending on debit and credit cards grew by just 1.0 per cent in May, according to new figures by Barclays, making it the smallest rise since February 2021 and below inflation which sits at three per cent.
The nation’s already stretched budget tightened in April as water and broadband bills rose.
Fast food, which has remained a resilient market amid the cost of living crisis, saw its first monthly decline since the pandemic, dropping by 0.2 per cent.
Restaurants were also dealt another blow, as spending on dining out fell by a staggering 15.7 per cent in May, against a 13.3 per cent drop the previous month.
Jack Meaning, chief UK economist at Barclays, said: ”The economic strength we saw in the first three months of the year was always expected to ease as we moved into the second quarter, with GDP having seen the extra bounce needed to recover the ground lost in last year’s recession.
“The underlying direction of travel remains though, with falling inflation, real income growth and low unemployment all pointing to a gradual acceleration in consumer spending over the next 12 months, especially as we begin to see the Bank of England reduce interest rates in H2.”
This comes as some 41 per cent of shoppers told Barclays they plan to re-wear more of their old summer clothes this year and 29 per cent are cutting back on shopping for their summer wardrobe due to cost-of-living concerns.
Overall retail spending fell -0.4 per cent – the biggest drop since September 2022 – with in-store spending (excluding groceries) and clothing sales dropping by -2.6 per cent and -1.0 per cent respectively.
Not all bad news, though
Some categories, though still in decline, showed signs of recovery last month.
Furniture stores saw their smallest decrease since last August, while home improvement and DIY stores had their best performance since last September, declining by 5.4 per cent
Barclays said this was likely due to “homeowners capitalising on the two May bank holiday weekends to spruce up their living spaces”.
A separate report by the British Retail Consortium (BRC) showed non-food sales decreased 2.4 per cent year on year over the three-months to May, against a growth of 0.7 per cent in the same period last year.
Helen Dickinson OBE, chief executive of the BRC said: “Despite a strong bank holiday weekend for retailers, minimal improvement to weather across most of May meant only a modest rebound in retail sales last month. Although non-food sales fell over the course of the month, the long weekend did see increased purchases of DIY and gardening equipment, as well as strong clothing sales.
“Growth in computing sales reached their highest levels since the pandemic, with many consumers continuing to upgrade tech bought during that period. Retailers remain optimistic that major events such as the Euros and the Olympics will bolster consumer confidence this summer.”
Unseasonable weather has been an ongoing problem for some of the UK’s best known retailers, hindering a number of companies’ earnings in the past year.
It comes amid fears that the UK could be hit with 50 days of rain over the summer months, making it the wettest on record since 1912.