UK retail sales rose 3.7% year-on-year in May
The UK retail sector experienced a significant surge in sales, with a 3.7% year-on-year increase in May. This growth was driven by heatwave demand and an early May bank holiday, which boosted sales of food, clothing, and outdoor goods.
The rise in sales comes after a 3.0% decline in April, marking the strongest annual increase since April 2025. However, despite this growth, spending power remains eroded due to inflation, with annual spending growth of 0.8% still below the 3% inflation rate.
Travel spending continued to decline, falling 5.8% for the third consecutive month, amid geopolitical anxiety surrounding the Iran conflict. This cautious approach to travel spending suggests that consumers are still being impacted by global events.
The mixed picture of recovering retail volumes and persistent real-terms weakness will likely keep the policy outlook finely balanced for the Bank of England.