Retail sales in the UK took a sharp turn in May 2025, with sales volumes dropping by 2.7 percent, marking the steepest monthly decline since December 2023. This setback follows a revised weather-boosted 1.3 percent rise in April. Year-over-year, retail sales fell by 1.3 percent.

The biggest hit came from food stores, where sales volumes plunged by 5.0 percent, their worst monthly fall since May 2021. Retailers attributed the decline to inflation-driven cutbacks, particularly in supermarkets, and lower spending on alcohol and tobacco. Non-food sales also declined (minus 1.4 percent), with subdued consumer activity in clothing and household goods, likely due to earlier-than-usual purchases spurred by April's good weather.

Online sales declined by 1.0 percent month-over-month, but rose modestly over the quarter. As in-store spending weakened, the share of online retail rose to 27.2 percent of total sales.

The May data reveal a temporary pullback in consumer activity, shaped by economic caution, seasonal effects, and shifting shopping patterns. This latest update leaves the RPI at 13 and the RPI-P at 24, meaning that economic activities remain well ahead of market expectations in the UK.

Retail sales measure the total receipts at stores that sell durable and nondurable goods. The data include all internet business whose primary function is retailing and also cover internet sales by other British retailers, such as online sales by supermarkets, department stores and catalogue companies. Headline UK retail sales are reported in volume, not cash, terms but are available in both forms. The data are derived from a monthly survey of 5,000 businesses in Great Britain. The sample represents the whole retail sector and includes the 900 largest retailers and a representative panel of smaller businesses, including internet sales. Collectively, all of these businesses cover approximately 90 percent of the retail industry in terms of turnover.

With consumer spending a large part of the economy, market players continually monitor spending patterns. The monthly retail sales report contains sales data in both pounds sterling and volume. UK retail sales data exclude auto sales.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.