U.K. retail sales rebounded in May from a slump in April as warm weather boosted demand for food, beverages and clothing, the British Retail Consortium said.
Sales at stores open at least 12 months, measured by value, gained 1.3 percent from a year earlier, the London-based trade group said today in a report compiled with accountancy firm KPMG LLP. That followed a 3.3 percent decline in April, the most in more than a year.
With Britain suffering its first double-dip recession since 1975 and risks from the euro area growing, Bank of England policy makers must decide today whether to add stimulus to their existing 325 billion pounds ($503 billion) of bond purchases. Officials will have to balance the need to bolster the recovery with the threat of inflation, which is above their target.
“After a dismal April, May was a much better month and many retailers will be breathing a small sigh of relief,” said Helen Dickinson, head of retail at KPMG. Still, a short-term “spending spree will not overcome the underlying difficulties facing the industry.”
Including stores open less than 12 months, the value of retail sales rose 3.4 percent in May from a year earlier, according to the BRC. In the three months through May, food sales increased 0.4 percent from a year earlier on a like-for-like basis, while non-food sales fell 0.6 percent.
While the gain in sales in May was led by demand for shorts, swimwear and gardening gear, big ticket purchases “continued to struggle,” the lobby group said.
Any recovery in demand may be curbed by rising unemployment and inflation that was at 3 percent in April, outpacing wage growth. A report from Vocalink Ltd. today showed that annual take-home pay growth at Britain’s largest publicly traded companies stood at 2.3 percent in the three months through May.
Separately, the Engineering Employers’ Federation and BDO LLP said a gauge of manufacturing output was at 20 in the current quarter, little changed from 19 in the first quarter. The EEF forecasts that manufacturing will shrink 0.1 percent this year, while the U.K. economy will grow 0.2 percent.