LONDON (ShareCast) - (Sharecast News) - UK retail sales strengthened in May, industry data showed on Tuesday, as the economy continued to emerge from lockdown.
According to the latest BRC-KPMG Retail Sales Monitor, sales jumped 23.7% on a like-for-like basis in May on the same month two years ago, when they declined 3.0%. Online plays a significant role in like-for-like figures.

On a total basis, sales were ahead 10.0% on May 2019, above the three-month average of 8.5% and an improvement on April's 7.3% increase.

The monitor has moved to year-to-two-year comparisons to strip out the impact of the pandemic on sales in 2020, when retailers were hit by different lockdown measures throughout the year.

However, in the three months to May, while total in-store non-food sales declined 16.7%, they jumped 27.1% on a like-for-for basis. Total food sales increased 9.8% over the same period or by 10.2% on a like-for-like basis.

Helen Dickinson, chief executive of the British Retail Consortium, said: "Retail sales were buoyant in May thanks to the reopening of hospitality, coupled with the afterglow of non-essential retail's own return. Pent-up demand for the instore shopping experience, as well as the first signs of summer weather, helped retail to the strongest sales growth of the pandemic."

Paul Martin, UK head of retail at KPMG, said: "The rain in May failed to dampen consumer demand. Clothing retailers were the biggest beneficiaries of pent-up demand, clocking up increases of over 100% as an easing of restrictions saw stores reopen and social events social come back on the agenda. Consumers also splurged on new jewellery, footwear and home accessories.

"Although some spend has migrated to the high street, there was still high penetration of online spending, reinforcing the view that the pandemic has seen a step up in online activity as some consumers maintain their use of this channel out of habit and choice, and some remain nervous about venturing back into stores."

Clive Black, analyst at Shore Capital, said: "We would expect the element of pent-up demand to be working its way through the system, with key demand drivers for us now being seasonal matters such as the weather, which has been favourable, and events like the forthcoming European football championships in the short term, alongside more fundamental features of the consumer economy.

"So employment, where labour supply appears very tight, consumer confidence, which is on the rise, and household expenditure, where there is a considerable bank of resource for many folks to draw upon."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The figures provide reassurance that the recovery in consumer spending still is on track.

"May, however, likely will represent this year's peak for retail sales, given that households now likely will devote more of their income to services again. Households' real disposable incomes also will come under pressure later this year from rising inflation, a reduction in the value of Universal Credit, and the closure of the furlough scheme.

"We continue to doubt, therefore, that consumer spending will exceed pre-Covid levels on a sustained basis this year and thus cause the economy to overheat."

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