Retail sales fall as people cut back on food shoppingon June 24, 2022 at 7:34 am

UK retail sales fell in May with households cutting back on food shopping as the rising cost of living bites into household budgets.

Overall sales fell by 0.5%, with nearly half of adults saying they were buying less food in the past fortnight, the Office for National Statistics said.

Surveyed adults said the price of food was also the most common reason for their monthly outgoings rising.

Supermarkets Asda and Tesco have said customers are cutting back on shopping.

Asda told the BBC some shoppers are setting £30 limits at checkouts and petrol pumps, with customers putting less in their baskets and switching to budget ranges.

Meanwhile, Tesco, the UK’s largest supermarket, has said it is seeing early signs that shoppers are changing their habits due to high inflation – the rate at which prices rise – such as buying less food and visiting more frequently.

The ONS said its feedback from supermarkets also suggested customers were spending less on their food shop because of the rising cost of living.

It found that sales in supermarkets dropped 1.5% in May, with a 2.2% drop in specialist shops such as butchers and bakers.

Prices overall are continuing to rise at their fastest rate for 40 years, with UK inflation at 9.1%, the highest level since March 1982.

Fuel and energy prices are the biggest drivers of inflation, but food costs drove the most recent rise in May, with prices for bread, cereal and meat climbing.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said the “horror” of April’s unprecedented rise in energy bills “swallowed a much bigger slice” of households’ income and “kept their appetite for spending under control”.

“It’s not just the rising bills of today that are worrying us, it’s the prospect of even higher bills tomorrow, and fears of a looming recession, which might cause our finances to unravel entirely,” she added.

In a BBC-commissioned survey of more than 4,000 people, 82% said they thought their wages should increase to match the rising price of goods and services.

Workers and unions have been pushing for pay rises, with strikes on the railways this week and BA workers at Heathrow voting to strike over the summer.

But the government has warned against employers handing out big increases in salaries over fears of a 1970s style “inflationary spiral” where firms hike wages and then pass the cost on to customers through even higher prices.

The drop in food sales comes as a long-running measure of consumer confidence recorded its lowest score since records began in 1974.

Market research firm GfK said its consumer morale index fell to -41 in June from -40 in May, below levels that have previously preceded recessions.

The ONS said that while food sales fell, fuel sales volumes rose by 1.1% in May – despite record high petrol prices.

Heather Bovill, deputy director for surveys and economic indicators at the ONS, said more workers returning to the office might be the reason in the uptick in fuel sales.

But she said the rise, along with boost in clothing sales, 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 proportion of online sales slipped back in May but remains substantially higher than before the pandemic, the ONS said.

The ONS revised down sales growth in April to a rise of 0.4% from its previous estimate of a 1.4% increase.