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Consumer spend slows as Brexit inflation hits

Retail sales volumes fell by 1.2% last month as an increase in prices led consumer spending growth to fall to levels last recorded in 2013.

The Office for National statistics said the rise in the annual rate of inflation to 2.9% in May, up from just 0.3% for the same month last year, was to blame for the sluggish spending rates.

Last month, retail sales in non-food stores showed their first year-on-year decrease since December 2015.

However, warmer weather however protected clothing and footwear sales during the month – they were up 4.3% in terms of volume year on year.

Alex Hamilton, head of insight at Ecommera, said: “The sector is facing a toxic cocktail of mounting cost pressures, political uncertainty and shifting consumption patterns. Households are being squeezed from both directions, with the gap between inflation and wage growth now the widest in three years. This at a time when retailers ideally need to pass cost rises on to customers, to protect already tight margins.

“This income squeeze will only be compounded by reduced consumer confidence following the indecisive election result and as Brexit talks get underway.”

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