June 3, 2019
By William Schomberg
LONDON (Reuters) – British shoppers cut back on their spending last month by the most in more than 20 years, a retailers’ group said, raising questions about how long consumers can keep on cushioning the economy from the impact of Brexit.
Retail sales sank by an annual 2.7%, the biggest fall – excluding distortions caused by the timing of Easter – since the British Retail Consortium’s records began in 1995.
The BRC said May’s fall should be seen in the context of an unusually strong jump of 4.1% in May 2018, when sales were boosted by sunny weather and the marriage of Prince Harry and Meghan Markle which encouraged consumers to hit the shops.
“But even the three-month average – which softens the monthly volatility – demonstrates that achieving growth in retail remains a real struggle,” said Paul Martin, head of UK retail at accountancy firm KPMG which sponsors the figures.
Sales rose by 0.2% in the three months to May, the weakest growth since the three months to March 2017.
In like-for-like terms, which smoothes out changes in the amount of retail space, sales fell by 3.0% in May, the biggest fall since the end of 2008, excluding Easter periods.
Retailers have reported mixed fortunes recently. Morrisons, Britain’s fourth-largest grocer, missed quarterly growth forecasts, blaming political and economic uncertainty and the third-largest player, Asda, warned of an “increasingly challenging backdrop”.
B&M, a small, fast-growing discount chain, reported its best ever Easter.
Overall, consumers have so far largely taken Brexit in their stride, helped by weaker inflation and stronger growth in wages.
That has helped the world’s fifth-biggest economy at a time when many companies have been cutting back on investment because of uncertainty about Brexit.
Separately on Tuesday, Barclaycard said 44% of respondents in a poll it commissioned expected Brexit would hurt their household finances and 30% said they were less likely to holiday abroad this year.
But 70% remained confident in their finances.
“Despite ongoing concerns about Brexit and the economy, household confidence is holding up as consumers continue to be savvy with their spending,” Esme Harwood, a director at Barclaycard, said.
Barclaycard did not publish monthly spending figures for May because it was adjusting its reporting process.
(Reporting by William Schomberg, editing by David Milliken)