British retail sales fell unexpectedly in May as a lifting of lockdown restrictions encouraged spending in restaurants rather than shops, according to official data from the Office for National Statistics (ONS), which found that retail sales fell 1.4% between April and May.

Food stores suffered the biggest hit, with a 5.7% drop in sales. Separately, on 18 June supermarket chain Tesco, Britain's biggest retailer, reported a sharp slowdown in underlying UK sales growth in its first quarter.  

“Anecdotal evidence suggests the easing of hospitality restrictions had an impact on sales as people returned to eating and drinking at locations such as restaurants and bars,” the ONS said.

Most economists said the weak retail sales data was not necessarily suggestive of weaker consumer spending as the economy recovers from the COVID-19 pandemic, since hospitality businesses have reported booming trade. But Samuel Tombs, at consultancy Pantheon Macroeconomics, said more recent payment card data suggested that the surge in consumer spending could be losing steam. He told Reuters: “Households’ real disposable income looks set to fall in Q4, as the end of the furlough scheme reduces employment and inflation rises to match wage growth.”

In annual terms, retail sales were 24.6% higher than May last year and household goods stores bucked the wider decline with month-on-month growth of 9.0%, which the ONS linked to spending on outdoor goods.