Here comes the Sun? Warm weather and bank holidays fuel spending spree
Retail sales rose in May, boosted by an extra bank holiday marking the coronation as well as sunny weather.
Sales lifted 0.3 per cent last month after a 0.5 per cent rise in April, continuing a bounce in spending that some believe points to a return of consumer confidence after last September’s disastrous “mini-Budget”.
Heather Bovill, of the Office for National Statistics, said that shops did “particularly well selling outdoor goods and summer clothes, as the sun began to shine”.
She added: “Garden centres and DIY stores also saw growth, as the good weather encouraged people to start home and garden improvements.”
The rise was also fuelled by cheaper petrol and diesel, which lifted spending by 1.7 per cent across the month.
Food purchases dropped by 0.5 per cent as consumers are forced to buy fewer but more expensive foodstuffs, the ONS said.
It added there was some evidence this might be partly because people drank more and ordered takeaways on the coronation bank holiday.
The impact of inflation is stark however. In May, shoppers spent 17 per cent more than in February 2020, but bought 0.8 per cent fewer goods because of the rise in consumer prices.
The amount of food that people buy in shops has been dropping consistently since around July 2021.
Samuel Tombs, of consultancy Pantheon Macroeconomics, said a consumer-led downturn would probably be avoided as falls in expensive energy bills offset higher borrowing costs for mortgage-holders.
A separate survey shows UK consumers more optimistic about their finances and the economy. Consumer sentiment rose in June for the fifth month in a row to its highest level since January 2022.
Thomas Pugh, economist at RSM UK, said: “The rise underscores the current resilience of the economy and the Bank of England felt it necessary to raise interest rates by 50bps (basis points).”
He added: “The outlook over the next year is mixed. Strong wage growth and falling inflation will mean real incomes start to rise again in the second half of this year and through 2024.
“On the other hand, the mortgage rate surge to more than 6 per cent will cause significant amounts of pain over the next 18 months.”
