Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
British retail sales tumbled 2.7 per cent in May, a much steeper drop than expected and the first this year, as consumers cut back on purchases of food and household goods.
Friday’s figure from the Office for National Statistics was below the 0.5 per cent decline forecast by economists polled by Reuters.
The fall, the largest for any month since December 2023, followed a rise in April, which retailers said was down to the unusually sunny weather.
The volume of food store sales fell back in May, reversing a bounce in April. Overall retail sales volumes were down 1.3 per cent in May compared with the same month last year.
Paul Dales, economist at the consultancy Capital Economics, said: “The sharp drop back in retail sales volumes in May adds to other evidence that the burst of economic growth in Q1 is over.”
Retail sales figures are the first official economic data for May, providing an indication of consumer demand.
The decline came as separate figures published by the ONS on Friday showed the UK government borrowed more than expected in May.
Borrowing was £17.7bn last month, exceeding the £17.1bn forecast by the Office for Budget Responsibility, the UK’s official fiscal watchdog, and up £700mn from the same month last year.
Borrowing — the difference between total public sector spending and income — for the first two months of the new tax year was £37.7bn, below the £40.7bn forecast by the OBR.
Chancellor Rachel Reeves is under pressure to meet her fiscal rule to balance day-to-day spending with revenues by 2029-30 while improving public services and spurring growth.
