Price decreases in UK shops lead to increased sales amidst inflation slowdown

Sales in British shops increased in May, as shown by retail data. This suggests that customers are buying more because inflation is slowing down. A survey by the Confederation of British Industry (CBI) found that +8% more retailers reported higher sales this month compared to a year ago. This is a big improvement from the -44% drop seen in April. May had the best sales numbers since December 2022. The CBI's lead economist, Alpesh Paleja, mentioned signs of a short-term retail recovery. The government, especially Rishi Sunak and the Conservatives, may use this positive data to support their claims of economic improvement. The bad weather and high cost of living crisis affected sales negatively in April and March. Easter being earlier than usual in March also played a part in the sales drop. Store prices grew at a slower rate in May compared to the previous month. This decrease in price growth is seen as a good sign by the Bank of England, which is considering lowering interest rates in June. However, the long-term outlook for retail employment and investment is less optimistic. Shop price inflation has decreased, especially for big purchases like furniture and TVs. This is due to households being cautious with spending because of the cost of living pressures. Food prices rose slightly in May, but the rate of increase slowed down. Retailers are cutting prices to attract more shoppers. The head of business insight at NielsenIQ mentioned that consumer sentiment is improving, but demand is still affected by unseasonable weather. The hope is that the worst of the inflation increase is over, which could lead the Bank of England to lower interest rates to help households. Shopping destinations saw fewer visitors in May, with a slight decrease in sales at established stores. This information is based on a survey by the advisory firm BDO.