Retail Sales plunge: Largest drop since 2023 signals stormy summer ahead

Despite two bank holidays and the warm weather, spending failed to kick start in May as consumers tightened their purse strings amid resurging inflation, April utility bills rises and poor labour market conditions. Similarly, retailers grappled with the staffing and cost challenges arising from the Chancellor's tax hikes.

While some retailers cited an uptick in ‘home projects’ due to the improved weather as the driver behind the reduced footfall, most of the factors point to what should have been a positive month, so today's data will be a real sign of worry for those businesses hoping for strong summer sales.

With the middle-east tensions at breaking point, US tariff uncertainty still high and the Bank of England holding off interest rate cuts - the outlook for consumer demand looks rocky. In this environment, retailers must ensure they have all the steps in place to ensure they can roll with any further surprises. Minimising exposure to FX volatility, and ensuring ready access to finance are a good place to start.