"Most sub-sectors reported flat or falling sales over the year, with only furniture and carpets and recreational goods seeing strong growth"
-Confederation of British Industry
Sales at Britain's retailers dropped the most in 16 months, due to weak demand for food and drink, according to an index compiled by the Confederation of British Industry. A measure of annual sales growth dropped to minus 11 in May, the lowest level since January 2012, and down from minus 1 a month earlier. Economists, however, expected an improvement in retail sales and forecasted a reading of plus 3 as the economy is picking up.
The report also showed that the main factors that curbed consumers spending were higher energy prices and weak wage growth. Data published earlier this month unveiled that expenditure by households increased just 0.1% in the first quarter of this year, the least since the third quarter of 2011. In the meantime, a gauge of the volume of orders placed with suppliers tumbled to minus 25 in May compared with minus 12 in the prior month. Earlier in May the Bank of England has forecast a gradual recovery in consumer spending; however, weak wage growth is expected to limit any pickup in expenditure. Meanwhile, online retail continues to grow and is now expected to account about 21.5% of all retail sales by 2018.
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