Online retail sales slowed in the key May trading period on political uncertainty and rising inflation

Courtney Goldsmith
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Economic uncertainty has dragged online retail sales growth to record lows in the crucial early summer trading period as new figures show the lowest growth rate in over a year and a half.

Although online retail sales in the UK increased 10.2 per cent in May compared with the previous year, the surprise General Election announcement and rising inflation were key factors in pushing consumer spending to a new low, according to IMRG Capgemini e-retail sales index.

"As spending warms up with the start of summer, May and June are usually two of the strongest months of the year. With ongoing economic and political uncertainty however, this month’s results show a clear reversal of that trend," said Bhavesh Unadkat, principal consultant in retail customer engagement design at Capgemini.

Clothing was one of the sectors hardest hit as consumers felt the squeeze of stagnant wage growth and rising inflation. Sales growth of 7.6 per cent was the lowest recorded for the month of May in the history of the index.

The electricals sector actually experienced a dip in growth. Sales growth fell 8.6 per cent, which was the only negative year-on-year change the sector has seen for the month of May since the index started tracking it in 2003.

Consumer confidence tends to fall ahead of an election, so the drop in online retail sales growth was not unexpected, said Andy Mulcahy, editor of IMRG.

However, this time growth might not pick right back up again like it normally does.

"The issue this time is that we now have a hung parliament, which leaves all political options still available, including the potential for yet another general election in the near future. 2017 is certainly turning out to be a very challenging year for retailers to navigate," Mulcahy said.

Sales growth through tablet devices also dipped to a record low in May, down 4.9 per cent year-on-year. This is likely due to consumers using smartphone devices for shopping where they would have previously used tablets, the report said.

Sales growth through smartphones rocketed up 46.2 per cent.

Read more: Annual retail sales growth slowest since April 2013

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