May retail sales were 0.1 per cent down from April, according to National Statistics. The slowdown was against a background of increases in National Insurance contributions and council tax.
In the three months to May, retail sales grew by 0.5 per cent and by 3.4 per cent compared with the same period last year. The 3.4 per cent annual increase was the weakest growth rate since July 1999.
Although analysts were disappointed by the figures, most thought they were not catastrophic.
'A slowdown, but far from disastrous. The good news is we might get a further rate cut,' said analyst Richard Ratner of Seymour Pierce.
Barclays Business Banking national retail director Paul Clarke said: 'Sales figures in May have held up strongly, given a background of increased National Insurance contributions and unseasonal weather in the middle of the month.
'Two bank holidays and good weather in the last week of May helped to improve growth rates, with clothing and footwear stores experiencing an underlying growth of 4.4 per cent.'
Ratner added that the numbers were 'a little below expectation, and even more surprising as the clothing number is higher than anecdotal evidence has reported.'
Broker CSFB noted that: 'Clothing did not sell as much as we would have expected, given the much weaker comparative position in May. The performance was affected by volatile weather conditions.'
While the ONS data indicated conditions were getting tougher for retailers, separate figures from the British Bankers' Association (BBA) showed credit card lending increased by about£500 million last month.
No comments yet