High Street sales boost despite referendum uncertainty

Consumers sent sales on the High Street surging in May despite uncertainty over the EU referendum.

The Office for National Statistics (ONS) said the quantity of retail sales increased by 0.9% compared with April, and is up 6% on the same time last year.

Average store prices, including petrol stations, were down 2.8% on a year ago, and the amount spent was up 3.1% over the same time and 1.3% compared with the month before.

The value of online sales increased by 21.5% on a year ago, and 6.4% on April.

The above-expectation figures show consumers are paying little heed to warnings that the economy could nosedive following a Brexit vote next week, analysts said.

However, they also warned that strong sales had only been made possible by rapid price falls, and growth was likely to slow markedly in the second half of the year, regardless of the referendum result.

UFX.com managing director Dennis de Jong said: "Retail sales have been a little erratic over the past few months, but it's good news that May's figures have come in above expectation.

"Demand for household goods was likely to be weaker following the mad scramble to finalise property deals before the new stamp duty regulations were introduced in April.

"Even though there is plenty of uncertainty ahead of next week's EU referendum, consumers have still been spending on the high street which is what the Government needs."

IHS Global Insight said: "Should the UK vote to leave the EU in next Thursday's referendum, the strong suspicion is that consumer spending would be severely pressurised for some time as a consequence of increased uncertainty, likely higher unemployment and squeezed purchased power.

"It is probable purchasing power would be squeezed by inflation being pushed up markedly by a sharp fall in sterling."