UK Retail Sales Jump On Discounting

UK retail sales jumped in May as supermarket discounting and online business drove a better-than-expected performance for the sector.

The Office for National Statistics (ONS) said that volumes rose 2.1% in May following a 1.1% fall the previous month - partly blamed on bad weather hitting demand for summer fashions.

Today the statisticians pointed to a 3.5% month-on-month rise in food sales in May - the strongest rise in two years - aided by supermarkets offering promotions amid a bitter price war to secure customer loyalty.

Non-store retailing, which includes online sales, grew by 4.3% with online now accounting for 9.7% of all retail revenue.

The ONS added that all types of stores saw business pick up, with discounted summer fashions helping sales of clothes, shoes and textiles rise 1.4% on the month.

The performance will boost hopes that consumer spending - so crucial to hopes of a sustained economic recovery - is on the rise despite the continuing squeeze on household incomes driven by low wage growth at a time of rising prices, such as energy bills.

Economists had widely predicted a rise of just 0.8% in sales volumes for May.

Ahead of the release of today's figures, the market learned that Dixons Retail - the owner of Curry's and PC World - had achieved a strong last financial year despite big costs associated with its online operation, Pixmania.

While it reported a pre-tax loss of £115.3m, its UK and Ireland operations made profits of £82.5m in the wake of rival Comet's collapse though Dixons chief executive Sebastian James insisted that was not the only factor behind the growth.

Pixmania made a loss of £182.4m due to a writedown in the value of the business and the cost of closing stores and laying off staff.

Similarly, Ted Baker confirmed it had seen a big rise in sales - up 30.7% year on year over the 20 week period to June 15 - with revenues jumping 32.7% compared to the same time last year.

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