UK DATA: BRC Retail Sales Rebound in May, Helped by Warm Weather

BRC retail sales growth rebounded to 3.7% Y/Y in May (-3.0% Apr, 3.6% Mar), after the prior two months were distorted by base effects relating to Easter timing. Across March and April together, retail sales had grown 1.5Y Y/Y, so this is still a decent acceleration in May. Growth here was led by food sales, alongside a decent pickup in clothing and household appliances, with the latter helped by May's record-breaking heat.

• Food sales increased 3.9% Y/Y in May (-2.5% Apr, 6.8% Mar), which the press release attributes in part to the bank holidays and warmer weather. "The late May bank holiday heatwave boosted shopper activity, driving sales growth in the final week of the month."
• Non-food sales grew 3.5% Y/Y (-3.3% Apr, 0.9% Mar), mostly driven by clothing, household appliances and "other non-food" sales. For clothing, this looks to be a rebound from weakness since Jan, while household appliances were boosted by strong sales of fans and air con units amid record-breaking May temperatures. Garden- and outdoor-related purchases also helped non-food sales.
• The reporting period covers the four weeks 3 - 30 May, meaning it includes both bank holiday weekends in the month, which was also the case last year. This is the same reporting period as upcoming ONS retail sales data (due Fri 19 Jun), which saw a sharper-than-expected monthly pullback in April, though mainly due to a reversal lower of fuel sales. Ex-fuel, the decline was broadly in line.
• On consumer sentiment, the BRC release adds "With forecasts pointing to further heatwaves due to El Niño and the added momentum of the upcoming World Cup, food and drink retail performance may benefit from improved shopper sentiment in the coming months."
• "However, the outlook beyond summer is more uncertain due to rises in the energy price cap from July and the risk of further increases later in the year, alongside effects of the Middle East conflict expected to drive up food inflation, both risking a downturn in shopper confidence."