20 June 2008, 18:36 PM
  • UK retailers forged ahead last month with record growth in sales of food that gave few signs consumers were suffering from rising living costs, according to official data.

The Office for National Satistics said retail sales volumes rose 3.5% in May, the fastest monthly increase on record, and well above forecasts for a slight downturn. That took the less volatile quarter on quarter growth rate to 1.8%, and meant sales over the last three months were 5.4% higher than in the same period a year earlier.

The figures are a sharp contrast with the downbeat tone of recent trading updates from retailers such as J Sainsbury and Woolworths, and with other surveys suggesting consumers were cutting back on non-essentials as they felt the bite of higher fuel and energy bills.

But the British Retail Consortium also reported evidence of a surge in spending in May, which it attributed to a short-term burst of optimism as the weather improved. Richard McGuire, strategist at RBC Capital Markets, said better weather could have prompted a spurt in sales of seasonal food. Even if this was short-lived, he added, it would be “decidedly uncomfortable reading” for the Bank, “given its evident dependence on slowing growth to ensure consumer price inflation returns to target.”

“What this number does tell us - conclusively - is that the consumer isn’t slowing,” said Neville Hill, economist at Credit Suisse. “It may not be quite as strong as these numbers suggest, but it’s certainly not weak.”