Further signs of recovery in the retail sector emerged today as figures showed promotional activity among stores helped to overcome last month’s “topsy-turvy” temperatures.
The British Retail Consortium (BRC) and KPMG said like-for-like sales grew 1.8 per cent in May, boosted by strong demand from internet shoppers.
The figures come the day after accountancy firm BDO reported a 0.8 per cent increase in high street sales for the month, although economists have warned that consumers’ spending power is coming under pressure from rising prices and weak earnings growth.
Howard Archer, pictured, chief UK economist at IHS Global Insight, said consumer price inflation dipped to 2.4 per cent in April, from 2.8 per cent the previous month, but “could very well move modestly above 3 per cent over the coming months”.
He said: “How much consumers spend over the coming months is crucial as to whether the economy can gradually develop a firmer growth footing, and the prospects for this look mixed.
“Much will depend on how employment develops and whether recent signs of economic improvement lift consumer confidence on a sustained basis and fuels an increased willingness to spend. Inflation and wage developments will obviously also be critical.”
BRC director-general Helen Dickinson said the best-selling category last month was furniture and flooring, while clothing sales started off well but suffered towards the end of May as temperatures plunged.
She added: “Retailers pulled off a good result in May, despite contending with topsy-turvy temperatures and continued economic difficulties.”
David McCorquodale, head of retail at KPMG, said many retailers “had their bacon saved” by online sales, which grew 11 per cent year-on-year as the popularity of “click and collect” services continued to rise.
He said: “Consumers remain highly sensitive about price and retailers are increasingly using promotional activity to drive footfall or the online equivalent.
“Just how much margin is being given away to boost sales is yet to be seen in the retailers’ accounts but, on the surface, these promotions seem to be working.”