Persistent wet weather and ongoing cost-of-living pressures cast a shadow over British consumer spending in May. A recent survey indicated the weakest spending
growth in over three years.
Barclays reported that spending on its customers' debit and credit cards increased by only 1.0% compared to a year earlier, a slowdown from April's 1.6% annual growth, marking the weakest rise since February 2021. Similarly, the British Retail Consortium (BRC) trade body announced that sales at its members' stores grew by just 0.7% on an annual basis. This was a recovery from April's 4.0% decline but fell short of the 3.9% growth seen a year earlier.
Neither the Barclays nor the BRC data are adjusted for inflation, which stood at 2.3% in April. This suggests that the actual volume of goods and services purchased in May likely declined. The Met Office reported that parts of England experienced a month's worth of rain in a single day during May, keeping shoppers indoors. Overall rainfall was 16% higher than average across the UK.
"Despite a strong bank holiday weekend for retailers, minimal improvement in weather throughout most of May resulted in only a modest rebound in retail sales last month," stated BRC Chief Executive Helen Dickinson.
The British economy, which experienced a shallow recession in the latter half of last year, showed strong quarterly growth of 0.6% in the first quarter of this year. Prime Minister Rishi Sunak's unexpected announcement of an election for July 4—against expectations for October or November—was interpreted by some analysts as a move influenced by concerns that voters would not feel better off later in the year.
Barclays revealed that 87% of consumers surveyed were worried about higher household bills, particularly council tax, broadband, mobile bills, and water charges. Nearly half of the respondents indicated they were cutting discretionary spending, such as on summer clothing. The Barclays data covered spending from April 20 to May 17, while the BRC figures spanned from April 28 to May 25. Photo by DncnH from Melton Mowbray, UK, Wikimedia commons.