* UK retail sales drop 1.4% in May
* Food stores suffer biggest hit as people head to
restaurants
* Tesco reports weak underlying sales in Q1
* Outdoor goods sell well in May
(Adds reaction)
By Andy Bruce and William Schomberg
LONDON, June 18 (Reuters) - British retail sales fell
unexpectedly last month as a lifting of lockdown restrictions
encouraged spending in restaurants rather than shops, according
to official data.
Retail sales fell 1.4% between April and May, the Office for
National Statistics said.
A Reuters poll of economists had pointed to an 1.6%
month-on-month increase in retail sales volumes for May. Only
three of 19 forecasts showed a fall.
Food stores suffered the biggest hit, with a 5.7% drop in
sales. Separately on Friday 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.
"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," he said.
The rapid advance of the "delta" variant of COVID-19,
despite Britain's swift roll-out of vaccines, could also crimp
household spending in the weeks ahead.
An end to lockdown in England that had been scheduled for
Monday has been delayed for four weeks.
In annual terms, retail sales were 24.6% higher than May
last year, short of the median expectation for a 29.0% increase.
Household good stores bucked the wider decline with
month-on-month growth of 9.0%, which the ONS linked to spending
on outdoor goods.
Earlier this week, motoring and outdoor goods store Halfords
said it had been doing a roaring trade in bicycles.
(Reporting by Andy Bruce
Editing by William Schomberg)
Halfords (HFD)
