Retail sales fall as UK hospitality reopening hits food spending – business live

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Retail sales across Great Britain have fallen unexpectedly in May as the reopening of hospitality venues hit spending at food shops, and online.

Retail sales volumes declined by 1.4% between April and May 2021, new figures show, following the latest easing of lockdown restrictions which allows people to eat indoors in restaurants and pubs again.

That follows a very strong April, when retail sales surged by 9.2% as the reopening of non-essential shops during April saw people racing back to the high street.

Economists had forecast retail sales growth of 1.6% in May. But instead, it appears that the reopening of indoor hospitality hit sales at food and drink vendors – as people took the opportunity to eat and drink out again.

The largest contribution to the monthly decline in May 2021 came from food stores (such as supermarkets), the Office for National Statistics says, where sales volumes fell by 5.7%.

The ONS explains:

…anecdotal evidence suggests the easing of hospitality restrictions had had an impact on sales as people returned to eating and drinking at locations such as restaurants and bars.

Despite this fall, food store sales remain higher than their pre-pandemic level, with sales in May 2021 2.6% higher than in February 2020.

But the ONS adds:

Feedback from retailers suggested that sales were negatively affected in May by both the reopening of all retail sectors and the relaxation of hospitality restrictions, with specialist retailers of alcoholic drinks and tobacco reporting a monthly decline of 8.4%.

Online shopping also took a hit in May, with retail sales volumes dropping by 4.2% as people returned to physical shops again.

Non-food stores, such as household goods outlets, had a better May, with sales volumes up 2.3%.

Household goods stores (for example, hardware and furniture stores) saw a 9% rise in sales, while “other” non-food stores reported 7.7% sales growth.

The ONS says:

…. anecdotal evidence from retailers suggested increased spending on outdoor garden furniture in preparation for the summer and the relaxation of social gathering rules.

But overall, retail sales are still strong over the last two months.

In April and May combined, average total retail sales volumes were still 7.7% higher than in March 2021 (before the easing of lockdown rules), and 9.1% higher than in February 2020 before the pandemic hit the UK.

Here’s ONS director of economic statistics, Darren Morgan:

More retail and reaction to follow….

Meanwhile in the markets, the US dollar is holding onto its gains since the US Federal Reserve penciled in earlier interest rate rises on Wednesday.

This has pushed the pound down to around $1.39, the lowest in six weeks.

European stock markets are set for a subdued open.

The agenda

• 7am: UK retail sales for May
• Today: Online retailer Boohoo hold AGM