Consumer spending slows to lowest growth of the year amid falling confidence

Western Telegraph

8 hours ago

Sales of fashion and full-price big ticket items were held back by faltering consumer confidence, although gaming bucked the trend due to popular new releases, according to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor.
Total retail sales across the UK were up by 1% year-on-year in May, against growth of 0.7% a year ago, driven by food sales increasing by 3.6% on the back of football tournaments and two bank holidays, prompting spending on BBQs and picnics.
Non-food sales were down 1.1% year-on-year in May.
BRC chief executive Helen Dickinson said: 'Consumers put the brakes on spending, with the slowest growth in 2025 so far.
'Retailers are grappling with the £5 billion in extra costs from higher National Insurance contributions and wages, which kicked in during April. They also face an additional £2 billion later this year from new packaging taxes and remain concerned about the consequences of the Employment Rights Bill.
'Ensuring the new Bill supports workers' rights without undermining retailers' ability to continue to provide jobs and investment in people will determine whether Government achieves economic growth across the country or not.'
Linda Ellett, UK head of retail and leisure consumer markets at KPMG, said: 'While the sunshine continued, the pace of retail sales growth didn't in May.
'Early seasonal purchases were likely a factor, as was a dampening of some spending appetite as households reflected upon the recent combination of essential bill rises.
But May still saw slight growth, driven mainly by food and drink, with non-food purchases falling overall.'
Many places saw warm weather in May (Joe Giddens/PA)
Separate figures from Barclays also show consumer card spending grew just 1% year-on-year in May, down from April's 4.5%.
The bank said May's two Bank Holidays encouraged discretionary spending, although this was offset by wet weather in the second half of the month, and by consumers cutting back amid falling confidence in personal finances.
Spending in pharmacies and on health and beauty recorded the highest growth in May – up 12% – linked to the UK's sunniest spring on record and a surge in NHS website visits for hay fever advice.
Airline spending jumped by 9.7% as consumers made summer plans, while garden centres saw a 7.2% increase.
Karen Johnson, head of retail at Barclays, said: 'Consumers are clearly becoming more value-conscious as financial pressures persist, but they're still finding joy in the everyday – whether that's a small treat, a cinema trip, a garden project, or a carefully planned getaway.
'The double Bank Holidays in May and record sunshine will have given non-essential spending a helpful boost, but this was largely outweighed by the rainy weather in the second half of the month, while longer-term uncertainty continues to shape how and where people choose to spend.'