A sharp fall in demand for groceries, as pubs and restaurants reopened to indoor customers, has driven a decline in retail sales volumes.
The Office for National Statistics charted a surprise 1.4% fall in retail sales between April and May.
Economists had predicted growth of 1.6% on the back of a 9% surge the previous month following an easing of COVID-19 restrictions that released pent-up demand for goods on the high street.
The fall in grocery volumes was backed up by separate figures from Tesco, the UK’s largest supermarket chain, which noted a decline in sales for meals at home during April and May in its first quarter results statement.
Image: Tesco said it enjoyed a ‘strong performance’ overall in the three months to 29 May
The retailer, which like its rivals has been among those shielded from pandemic sales pain, still reported like-for-like UK sales growth of 0.5% over the period against the tough comparison of the same three months to May in 2020.
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Commenting on the wider performance for the retail sector as a whole, ONS director of economic statistics, Darren Morgan, said: “
“Following a sharp increase last month coinciding with post-lockdown reopening, retail sales dipped slightly in May.
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“However, they remain well above both their pre-pandemic levels and those seen in March before shops reopened.
“Food stores sales suffered as feedback suggested the reopening of hospitality meant consumers took advantage of eating out instead.
“Household goods stores and garden centres fared well as people spent money on improving their gardens in anticipation of the summer and the lifting of restrictions on outdoor gatherings.
“As customers returned to physical stores, online sales fell in May for the third consecutive month, but remain nearly 60% higher than the level seen in February 2020.”
In Tesco’s case, it reported revenue of £12.4bn – a rise of 1.3% on a like-for-like basis compared to the first quarter last year – and said it represented growth of 8.7% by the same measure on March-May 2019.
It reported a rising contribution from its Booker wholesale operation – thanks to hospitality reopening – and said a sales decline in Ireland reflected a strong comparison with a year ago as the country entered lockdown rather than any Brexit-related hit.
Image: Tesco boss Ken Murphy
Chief executive Ken Murphy told investors: “Our profit guidance from April remains unchanged.
“While the market outlook remains uncertain, I’m pleased with the strong start we’ve made to the year and continue to be excited about the many opportunities we have to create value over the longer term.”
A note to clients by Jefferies Equity Research said of the performance: “Resilient UK industry grocery sales and notable improvements at Booker have helped Tesco enjoy two-year stacked sales growth accelerating from the already strong levels seen at the end of 20/21.
“Despite the lack of formal guidance upgrade in this sales update, the upbeat start to the year suggests that guide for 21/22 retail profits similar to 19/20 could be bettered as the year progresses.”
UK car production fell by more than a quarter (27.1%) last month as a cyberattack at Jaguar Land Rover halted manufacturing at the plant, industry figures show.
The total number of vehicles coming off assembly lines – including cars and vans – fell an even sharper 35.9%, according to September data from the Society of Motor Manufacturers and Traders (SMMT).
“Largely responsible” for the drop was the five-week pause in production at Jaguar Land Rover (JLR) due to a malicious cyber attack, as other car makers reported growth.
JLR’s assembly lines in the West Midlands and Halewood on Merseyside were paused from late August to early October as a result.
During this time, not a single vehicle was made. Production has since restarted, but the attack is believed to have been the “most financially damaging” in UK history at an estimated cost of £1.9bn, according to the security body the Cyber Monitoring Centre.
It was the lowest number of cars made in any September in the UK since 1952, including during the COVID-19 lockdown.
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3:53
Are we in a cyber attack ‘epidemic’?
Despite the restart, the sector remains “under immense pressure”, the SMMT’s chief executive Mike Hawes said.
The phased restart of operations led to a small boost in manufacturing output this month, according to a closely watched survey.
Of the cars that were made, nearly half (47.8%) were battery electric, plug-in hybrid or hybrid.
The vast majority, 76% of the total vehicles output, were made for export.
The top destinations are the European Union, US, Turkey, Japan and South Korea.
JLR was just the latest business to be the subject of a cyberattack.
Harrods, the Co-Op, and Marks and Spencer, are among the companies that have struggled in the past year with such attacks.
Championship club Sheffield Wednesday have filed for administration, according to a court filing, which will result in the already struggling side being hit with a 12-point deduction.
The South Yorkshire club currently sit bottom of the Championship, the second tier of English football, with just six points from 11 games.
Known as The Owls, Wednesday are one of the oldest surviving clubs in world football, with more than 150 years of history.
Court records confirm the club have filed for administration. A notice was filed at a specialist court at 10.01am.
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2:58
Sky’s Rob Harris reports on the news that Sheffield Wednesday have filed for administration
What has happened?
The Owls, who host Oxford United on Saturday, have been in turmoil for a long time.
On 3 June, owner Dejphon Chansiri, a Thai canned fish magnate who took over the club in 2015, was charged with breaching EFL regulations regarding payment obligations.
Image: Sheffield Wednesday fans protest the ownership at a game away to Leeds United in January. Pic: Reuters
Weeks later, Mr Chansiri said he was willing to sell the club in a statement on their official website.
Image: Sheffield Wednesday’s troubles have sparked furious protests from fans. Pic: PA
Their crisis deepened just days later when another embargo was imposed on the club relating to payments owed to HMRC, before players and staff were not paid on time on 30 June.
In the months that followed, forwards Josh Windass and Michael Smith left the club by mutual consent. Manager Danny Rohl, now at Rangers, also left by mutual consent.
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2:12
Frustrated Sheffield Wednesday supporters have targeted their embattled club’s owner in a highly-visible protest during their opening match of the season.
The Owls were forced to close the 9,255-capacity North Stand at Hillsborough after a Prohibition Notice was issued by Sheffield City Council.
‘Current uncertainty’
On 6 August, the EFL released a statement, saying: “We are clear that the current owner needs either to fund the club to meet its obligations or make good on his commitment to sell to a well-funded party, for fair market value – ending the current uncertainty and impasse.”
On 13 August, the Prohibition Notice was lifted, but a month later, news emerged of a winding-up petition over £1m owed to HMRC.
Last season, Wednesday finished 12th. They had already been placed under registration embargoes in the last two seasons after being hit by a six-point deduction during the 2020/21 campaign, for breaching profit and sustainability rules.
With a 12-point deduction, the Owls would be 15 points away from safety in the Championship.
Doing well were computer and telecommunications retailers as the iPhone 17 launched in the month, while online jewellers reported strong demand for gold despite the price hovering around record highs.
Gold has been in demand, and in recent days reached a record high, as some investors moved money out of the US dollar and government bonds amid the ongoing government shutdown.
It came despite a rainy month – which typically keeps shoppers at home – and a five-day tube strike in London.
The impact of the rain could be seen, however, in the boost to online spending, which rose to one of the highest levels since the end of the pandemic.
A fall was recorded in food shop sales from August to September, signalling a response to high food price inflation.
A good week for the economy?
Retail sales figures are significant as they measure household consumption, the largest expenditure in the UK economy.
Growing retail sales can mean economic growth, which the government has repeatedly said is its top priority.
Earlier this week, another key economic measure came in better than expected.
Inflation remained at 3.8% rather than rising to the widely expected 4% – double the target rate set by the interest rate-setters at the Bank of England.
Consumers were feeling better about their finances, a closely watched measure of consumer confidence showed on Friday.
Buying sentiment is up from last month, according to market research company GFK, as intentions to buy big-ticket items like electrical goods and furniture rose.
Combined, it suggests people are not feeling too gloomy in the run-up to the November budget.