The Office for National Statistics (ONS) reported a 2.7% decline in UK retail volumes in May, marking the fastest slump since December 2023. A “dismal” performance by supermarkets, as shoppers cut back on alcohol, tobacco and groceries, was the primary driver of the drop, ONS analysts said.
Clothing and homeware outlets also noted “slow trading,” while DIY retailers saw demand fall after customers wrapped up spring home projects early thanks to good weather in April. Despite May’s setback, retail sales over the three months to May remained 0.8% higher than in the previous quarter, suggesting underlying resilience.
“This downturn reflects a fading April weather boost and growing cost-of-living pressures,” commented Paul Dales, chief UK economist at Capital Economics. The ONS has found that rising food prices remain one of the biggest factors squeezing household budgets.
Meanwhile, separate ONS data revealed government borrowing of £17.7 billion in May—the second-highest total for that month since records began in 1993 and up £0.7 billion on last year. Although income tax and National Insurance receipts rose, benefit payments linked to inflation produced a larger increase in spending.
Chancellor Rachel Reeves faces mixed fortunes: borrowing remains below the Office for Budget Responsibility’s forecasts so far this year, but economic growth has lost momentum, with GDP contracting by 0.3% in April after a 0.7% expansion in the first quarter.
ONS senior statistician Hannah Finselbach said consumers are becoming more cautious: “Many households are reducing non-essential purchases.” Retail and economic experts warn that the squeeze on real incomes may persist unless inflation eases and wage growth improves.
