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BRC provides greater insight into consumer behaviour

Poor retail sales - a surprise?

The latest sales figures from the BRC-KPMG’s monthly retail sales monitor has for the first time in the last couple of months revealed the true pattern of consumer behaviour according to the BRC.

The figures, released this week, showed that UK retail sales values were 2.1% lower on a like for like basis from May 2010 when sales rose 0.8%. In total sales were down 0.3% against a 3% increase in May last year.

Clothing, footwear and homewares purchases were hit while non-food, non-store sales growth also slowed in May.

Stephen Robertson, Director General, British Retail Consortium, said: "After two previous months distorted by the later Easter and extra bank holiday, this is a more realistic reflection of how tough conditions on the high street really are. The first half of May was better than the second, when the weather turned unseasonably wet and cold in many parts of the country, but customers' fundamental reluctance to spend is now clear to see. Households' disposable incomes continue to be squeezed by uncomfortably high inflation and low wage growth, while uncertainty over the effects of Government cuts is hitting consumers' sentiment about future finances.”

Robertson called for the Bank Of England to continue to keep interest rates low.

Helen Dickinson, Head of Retail, KPMG, agreed the figures were worrying: “It doesn't make for happy reading. The last half of the month was the most challenging given the good weather and World Cup last year. Across the month, virtually all non-food sectors experienced negative like-for-like sales to varying degrees reflecting consumer's reticence to spend as the disposable income squeeze tightens its grip. This, combined with falling margins driven by a greater focus on price, lower average transaction values and increasing manufacturing costs is leaving many retailers coping with a "double whammy" impact on cash flows."

The latest figures follow the ONS CPI annual inflation figures released last month that showed they had inflation had reached the highest point in April since September 2008 with annual inflation up by 0.5% up to 4.5%.

It also follows last week’s FootFall’s May index which showed a decrease of footfall on UK high streets of 1.3%.

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