Mon, 08 Aug 2022

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According to an ONS survey, 88 percent of adults said their cost of living had increased over the last month and 44 percent were buying less food while shopping.

LONDON, June 24 (Xinhua) -- British retail sales volumes declined by 0.5 percent in May, down from a 0.4-percent rise in April, read the latest official data on Friday.

"The fall in sales volumes over the month was because of food stores, which fell by 1.6 percent," said the Office for National Statistics (ONS), noting that rising food prices and the cost of living crisis have made people cut back on food spending.

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But at the same time, retail sales values rose by 0.6 percent in May, meaning that customers spent more but got less. The data echoed the soaring inflation in May, which hit a 40-year high of 9.1 percent.

Heather Bovill, ONS deputy director for surveys and economic indicators, said that feedback from supermarkets suggested that "customers were spending less on their food shop, because of the rising cost of living."

According to an ONS survey, 88 percent of adults said their cost of living had increased over the last month and 44 percent were buying less food while shopping.

"More workers returning to the office may have contributed to increased fuel sales this month," Bovill noted as sales volumes of automotive fuels rose by 1.1 percent in May, despite their rising prices.

According to the motor services organization, RAC, a liter of unleaded petrol now costs 1.90 pounds, while that of diesel costs 1.98 pounds -- both on their way to hit two pounds per liter. The average cost of filling a 55-liter family car has passed the 100 pounds mark.

In non-food sectors, store sales remained unchanged over the month. Shoppers who buy new clothes in preparation for holidays contributed to a monthly 2.2-percent increase in clothing sales in May.

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But Bovill added "these rises were offset by falls for household goods and department stores, with retailers in these areas reporting consumer reluctance to spend due to affordability worries and higher prices."

The retail sales decline came as another economic indicator -- GfK's long-running Consumer Confidence Index -- also decreased one point to -41 in June, the lowest level since records began.

"With prices rising faster than wages, and the prospect of strikes and spiraling inflation causing a summer of discontent, many will be surprised that the index has not dropped further," said Joe Staton, Client Strategy Director of GfK.

"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," said Staton.

However, Britain's inflation, which has been far above the 2-percent target set by the central bank, is expected to grow even higher.

The Bank of England (BoE) earlier this month estimated that the inflation will rise to slightly above 11 percent in October when the energy price cap is likely to rise again.

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To battle the soaring inflation, the BoE has raised the benchmark interest rate five times in a row since December last year. Now the interest rate stands at 1.25 percent, the highest level since 2009.

In another effort to ease the pain of surging prices, Chancellor of the Exchequer Rishi Sunak announced in May that around 8 million of the country's poorest families will receive a payment of 650 British pounds (about 800 U.S. dollars) alongside other supporting measures.

But apparently, the measures have not transformed consumers' confidence.

"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," Staton from GfK stated.

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