Retail sales data, June 2017 - PwC comments

Jun 15, 2017

In response to the latest retail sales data, Andrew Sentance, senior economic adviser at PwC, commented:

"The rise in inflation which was reported earlier this week is squeezing the growth of retail sales volumes. Last autumn, the annual growth of sales volumes was close to 6% but in the last three months, the rate of increase on a year ago has slipped to 2.3%. This is further evidence that the surge in consumer spending, which sustained UK economic growth since the EU referendum, has come to an end. With prices rising more rapidly, shoppers find their money does not go so far and they are therefore reining in their spending.                                                                                  

"We should expect this subdued growth of consumer spending to continue while inflation remains around 3 percent - and there is a risk it could go even higher. The result is likely to be relatively sluggish economic growth this year and next - with GDP rising by around 1.5% in 2017 and 2018, the weakest period of growth since the euro crisis in 2011 and 2012."

Madeleine Thomson, UK leader of Retail and Consumer at PwC, added:

“The year-on-year growth in retail sales in May 2017 was 0.9%, which is the lowest growth level since April 2013. Increased retail prices across all sectors were a significant factor in slowing that growth.”

“However, weekly online spending was £1.1 billion - an increase of 14.4% compared with May 2016. Online spend accounted for 15.9% as a proportion of all retail spending, compared with 14.3% in May 2016 - which is indicative of the growing consumer trend to shop online to find the best deals available.” 

Headline figures:

  • In May 2017, the quantity bought in the retail industry was estimated to have increased by 0.9% compared with May 2016; the annual growth rate was last lower in April 2013.
  • Non-food stores were the main contributing factors to this slowdown with an annual fall of 1.2% and predominantly food stores saw the lowest annual growth since July 2013 at 0.1%.
  • Month-on-month, the quantity bought was estimated to have fallen by 1.2% following strong growth in April 2017.
  • The underlying pattern, as measured by the 3 month on 3 month change showed growth of 0.6% in May 2017.
  • Average store prices (excluding fuel) increased by 2.8% on the year; the largest growth since March 2012.

Ends.

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