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Retail sales volumes fell back in May following a brief uptick in April as lower grocery sales hit overall sales volumes.

The Office of National Statistics found UK retail sales fell back 0.5% in May 2022 following a rise of 0.4% in April 2022 (which itself was revised down from a rise of 1.4%).

In the three months to May 2022, sales volumes fell by 1.3% when compared with the previous three months; this continues the downward trend since summer 2021.

Year-on-year, sales volumes over the last three months fell by 2.8%, while sales values rose by 6.9% reflecting annual implied inflation of 9.7%.

Sales volumes currently remain 2.6% above their pre-coronavirus February 2020 levels.

The ONS said the fall in sales volumes over the month was because of food stores, which fell by 1.6%. It said that reduced spending in food stores seems to be linked to the impact of rising food prices and the cost of living.

It noted that, when asked about their shopping habits in the past two weeks, 44% of adults reported that they were buying less food when food shopping. This proportion appears to be increasing, having been 41% in the previous period and 18% at the beginning of 2022.

Automotive fuel sales volumes rose by 1.1% in May 2022 despite soaring prices, which the ONS said may in part be linked to increased hybrid working and a fall in those working exclusively from home.

Non-food stores sales volumes were unchanged (0.0%) over the month; an increase in clothing sales (2.2%) was offset by a fall in household goods (negative 2.3%), such as furniture stores, and department stores (negative 1.1%).

The proportion of retail sales online fell to 26.6% in May 2022 from 27.1% in April but remains substantially higher than the 19.7% in February 2020 before the coronavirus pandemic.

Morning update

UK consumer confidence has fallen to a new low, according to GfK’s long-running Consumer Confidence Index.

The index decreased one point to -41 in June, with four measures were down in comparison to the May and one flat.

The measure for the general economic situation of the country during the last 12 months is down two points at -65, which is 18 points lower than in June 2021.

Meanwhile, expectations for the general economic situation over the coming 12 months have dropped by another point to -57, which marks a drop of 55 points since June 2021.

The index measuring changes in personal finances over the last 12 months decreased one point to -23; which is 23 points worse than June 2021.

The forecast for personal finances over the next 12 months also decreased three points to -28; now 39 points lower than this time last year.

GFK client strategy director Joe Staton commented: “ “With a headline score of -41 for June, the GfK Consumer Confidence Barometer has set a record low for the second successive month.

“With prices rising faster than wages, and the prospect of strikes and spiralling inflation causing a summer of discontent, many will be surprised that the index has not dropped further. The consumer mood is currently darker than in the early stages of the Covid pandemic, the result of the 2016 Brexit referendum, and even the shock of the 2008 global financial crisis, and now there’s talk of a looming recession.

“One thing is for sure, Britain faces a stark new economic reality and history shows that consumers will not hesitate to retrench and tighten their purse strings when the going gets tough.”

On the markets this morning, the FTSE 100 has rebounded 0.7% to 7,067.9pts.

Early risers include Diageo, up 1.3% to 3,583p, PayPoint, up 1.2% to 580p and Unilever, up 1.2% to 3,669p.

Fallers include Hotel Chocolat, down 5% to 285p, THG, down 3.9% to 79.8p and Naked Wines, down 3.9% to 155.8p.

Yesterday in the City

The FTSE 100 fell back another 1% yesterday to 7,020.4pts.

Online booze specialist Naked Wines lost 43.6% of its value on Thursday despite posting solid annual results as its gloomy outlook spooked the City. The shares closed at a historic low of 162.1p after the group warned sales would be below analyst expectations and profits would fall back to break even next year.

Other fallers included Virgin Wines, down 5.3% to 97.5p, Science in Sport, down 3.1% to 47p, Compass Group, down 2.3% to 1,641p, Greggs, down 2% to 1,839p, AG Barr, down 1.9% to 507p, PZ Cussons down 1.8% to 196.2p and DS Smith, down 1.7% to 282.3p.

The day’s risers included McBride, up 15% to 19.2p, THG, up 11.4% to 83p, Hotel Chocolat, up 4.9% to 300p, Ocado, up 4.3% to 855.4p, Just Eat, up 2.7% to 1,518.6p, Nichols, up 2.2% to 1,175p, B&M European Value Retail, up 1.3% to 377.2p, Unilever, up 0.5% to 3,626.5p and Hilton Food Group, up 0.4% to 1,046p.