UK retail sales data for May could lead to some of the recent backing for UK discretionary retail stocks "pausing for breath", analysts said.
Total sales in May were up 1.0% compared to last yea, the BRC-KPMG retail sales survey showed, coming after a big 7% jump in April boosted by good weather and a late Easter.
Food sales last month increased 3.6%, while non-food sales decreased 1.1% as non-food store sales fell 0.9% and online sales dropped 1.5%.
BRC chief Helen Dickinson said fashion and full-price big-ticket items were "held back by lower consumer confidence", while gaming bucked the trend thanks to new releases.
At the same time, Barclays issued its report on UK consumer spending via Barclaycard data, which covers nearly 40% of all UK credit and debit card transactions from April 26 to May 23.
Card spending was up 1.0% in the period, after 4.5% growth in April and 0.5% in March, with Barclays saying the slower spending came "amid falling confidence in personal finances”.
More positively, blockbuster films such as ‘Lilo & Stitch’ and ‘Mission Impossible - The Final Reckoning’ led cinema spending to surge 19.2% in May, whilst there was another strong performance from airline tickets (up 9.7%).
This level of growth shown in the BRC survey was more in line with the 1.1% growth seen in both February and March, pointed out independent retail analyst Nick Bubb, and after a "bumper April", this was expected.
Shore Capital analyst Clive Black said: "After strong, sunshine infused retail sales in April, plus the benefit of a late Easter, the weather turned chillier, normal in fact, which took the wind out of May’s UK retail sales, measured by the BRC-KPMG, even with a modest comparative of just 0.7%."
"That slowdown comes as essential costs hit households and retailers face into Rachel Reeves’ new cost structures.
"All in, some of the recent excitement for UK discretionary retail equities may pause for breath on this update," he said.
Black said the "robust" food sales growth was largely due to price inflation, as sales volume growth was "probably negligible".
However, grocers have lifted prices to reflect Chancellor Rachel Reeves' "potent mix of the rise in National Insurance contributions and the National Living Wage feeding into a progressive build of UK food inflation".
According to NielsenIQ, this inflation has been measured at 2.8%.
The sales mix is likely to be benefiting, Black said, "as many families eschew the virtues of casual dining to save dosh with their local supermarket’s premium private label (PL) ranges".
Black's conclusion was that "discretionary retail stocks may come off a little bit on the back of this... especially ones that have had a very good run of late".
Grocers, however, "feel fine in the big scheme of things" and all in he harbours "cautious optimism for the prospects of the UK consumer economy.
But the improvement in momentum is gradual, glacial, and the Government getting its act together, easing base rates, passing the planning legislation, and a bit of sunshine are all probably needed for our mood music to bounce back to where we thought we’d be in January".