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UK retail sales fall in May as shoppers show caution

Retail sales in the U.K. declined during May as consumer confidence was hit by rising inflation, two research reports published June 6 showed.

Same-store sales, which exclude the impact of new shop openings, fell by 0.4% in May compared with an increase of 0.5% in the same period a year earlier, according to a monthly report by the British Retail Consortium, or BRC, and the consultancy KPMG. Sales increased by 5.6% during April, much of which analysts attributed to the Easter holiday falling late this year.

"Overall, May's sales slowdown is indicative of a longer term trend of a decline in consumer spending power," BRC CEO Helen Dickinson said June 6.

In a separate report, also produced by the BRC and KPMG, figures showed that online sales of non-food products increased by 4.3%, compared with growth of 13.7% a year earlier. The report said it was the lowest rate of growth since December 2012.

British shoppers have been early adopters of online shopping, prompting tech giants such as Amazon.com Inc. and Alphabet Inc. subsidiary Google to experiment with retail concepts in the U.K. before rolling them out in the U.S.

Experts said U.K. shoppers were beginning to feel the impact of rising inflation and stagnant wage growth. Inflation rose by 2.7% in April, a four-year high, according to the government's Office for National Statistics. Meanwhile, real wages, which takes inflation into account, declined by 0.2% in the first quarter.

The squeeze has prevented shoppers from splashing out on groceries, fuel, household goods and clothing, according to a June 5 research report by Barclaycard. The report said consumer spending fell by 2.8% in May, a 10-month low.

"The impact of inflationary pressures on the nation's purse continues to play out in this month's figures, with shoppers evidently spending more on food and drink than on non-food purchases," said Paul Martin, U.K. head of retail at KPMG.

"With inflation continuing to rise and wage growth stagnating, consumers are starting to feel the pinch."