–May Retail Sales -1.4% m/m; +0.2% y/y; median -0.6% m/m; +1.5% y/y
–May Retail Sales ex fuel -1.6% m/m; unch. y/y;median -0.6% m/m;1.7% yy

LONDON (MNI) – Retail sales volumes fell at their fastest pace for
over a year in May and have not grown over the past 12 months, with
retailers reporting that the poor economic climate is hitting sales,
National Statistics reported Thursday.

The volume of retail sales including auto fuel fell by 1.4% on the
month and were up only 0.2% on the year, the sharpest monthly drop since
January 2010.

Analysts had expected to see a smaller fall on the month of 0.6%
and a rise on the year of 1.5%.

Excluding auto fuel, sales volumes fell an even larger 1.6% on the
month, and were flat on the year.

Last night, Governor of the Bank of England, Mervyn King, warned
that the rebalancing of the economy and the need to reduce the budget
deficit was squeezing living standards and slowing domestic consumption.

He added that it was uncertain how fast this rebalancing would be
and that it was impossible to know at what point the Monetary Policy
Committee would need to tighten monetary policy.

Sales in April were boosted by the warm weather and extra bank
holiday, with volumes up 1.1% on the month. National Statistics said
that feedback from retailers this month suggested that the weakness was
due to consumers cutting back due to the economic climate, citing rising
fuel prices and uncertainty over jobs and pay.

The latest decline was led by a 3.7% fall in the volume of sales at
predominantly food stores, the largest fall since June 2008, with
volumes down 3.5% on the year. This category includes large supermarkets
where sales of non-food items were hit particularly hard this month with
only those items on special offer selling in any great number.

Predominantly non-food store sales fell 0.4% on the month with only
sales at ‘other’ stores which tend to be the smaller retailers posting a
rise of 0.4% between April and May.

Sales of textiles, clothing and footwear were down 0.8% on the
month, while household goods store sales fell 0.9%. Sales at department
stores fell 0.3%.

Non-store retailing and repair, which includes internet stores,
rose 1.8% on the month.

The implied retail sales deflator fell to 3.8% in May from 3.7% in
April. Ex-auto fuel the deflator declined to 2.5% from 2.7%.

–London bureau: 0044 20 7634 1624; email: ukeditorial@marketnews.com

[TOPICS: MT$$$$,M$B$$$,MABDS$]