UK retail sales post steep decline in May

UK retail sales plunged in May, recording the steepest monthly decline in 18 months, as consumer demand softened following a strong April driven by spending on food, summer clothing, and home improvement.

Sales dropped by 2.7% on the month, a sharp reversal from April’s upwardly revised 1.3% gain and well below economists’ expectations for a modest 0.5% decline. On a year-over-year basis, retail sales fell by 1.3%, compared to a 5% rise in April and short of forecasts for a 1.7% increase.

Analysts pointed to a particularly weak performance in food retailing, with reduced spending on alcohol and tobacco, lower footfall in clothing stores, and a drop in DIY-related purchases—largely due to favorable weather earlier in the year that prompted many to complete home projects sooner.

The sharp downturn in retail activity adds to concerns that the momentum seen in the first quarter of 2025, when the UK economy grew by a better-than-expected 0.7%, may be losing steam. April saw a contraction, weighed down by the expiration of a property tax relief program and early fallout from U.S. tariffs.

Still, the Bank of England maintains its forecast for 1% full-year economic growth in 2025.