U.K. retail sales recovered at a faster than expected pace in May due to discounting and store sales promotion.
Retail sales volume including automotive fuel rose 1.4 percent from the previous month, when it was down 2.4 percent, the Office for National Statistics said Thursday. Economists had forecast just 1.2 percent rise after bad weather dampened April sales.
Likewise, annual growth came in at 2.4 percent, offsetting April's 1.1 percent drop and also exceeded the consensus forecast of 2.1 percent.
Decent retail sales growth in May gives a limited lift to the recent rapidly dwindling hopes that the economy can avoid further contraction in the second quarter, said IHS Global Insight's economist Howard Archer.
Consumer price inflation slowed to 2.8 percent in April, reducing the squeeze on household income. However, the weak economic outlook is undermining consumer sentiment.
Food store sales grew 1 percent from a year ago, while non-food store sales advanced 3.3 percent. Non-specialized stores sales volumes advanced 11.3 percent, the biggest increase since January 2000. On the other hand, clothing and footwear sales were down 1 percent.
Excluding fuel, retail sales volume rose 0.9 percent month-on-month, after declining 1.1 percent in the previous month. Economists had expected only a 0.7 percent increase.
Sales expanded 3 percent annually, erasing a 0.3 percent percent fall seen in April and better than the 2.7 percent increase forecast by economists.
The economy fell into a double-dip recession in the first quarter of 2012. To prevent the retail sector from making a negative contribution to GDP growth in the second quarter, sales volume needs to grow by at least 1 percent or so in June, Samuel Tombs at Capital Economics said.
Given the extent of economic uncertainty, the economist said consumers will remain reluctant to increase their spending on the high street though the remainder of this year.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.