Coronation boosts Scottish sales but inflation remains big problem, say traders

Sales have increased in Scotland but retailers should by wary of “stubbornly high inflation”, a trade association has warned.

Researchers credited the King’s coronation and bank holidays throughout May for the increase in Scottish retail sales, but advised that “one slightly better month doesn’t mean the storm clouds over the economy are likely to dissipate any time soon”.

From April 30 until May 27, total sales for the month in Scotland were 10.9% higher than sales from the same month in 2022, where they had grown by 1.6%.

The statistic is above the three-month average increase of 9.5% and the 12-month average growth of 7.8%.

When adjusted for inflation, year-on-year growth was 2%.

The numbers come from trade association the Scottish Retail Consortium (SRC), which publishes data on profit, footfall and shop vacancies.

Sales types examined by the SRC throughout the month of May were food, non-food and online sales.

The SRC identified that all three categories increased when compared with figures from May 2022.

SRC head of policy and external affairs, Ewan MacDonald-Russell, said: “Scottish shoppers took to the high street in a May bank holiday bonanza as the extra holidays, King’s Coronation and sunny weather finally tempted consumers to restart spending.

“Sales were up 2% in real terms, with most of the growth coming in clothing and footwear as consumers freshened up wardrobes with spring and summer lines.

“The value of food sales continue to increase enormously, driven by near record food inflation.

“Grocery sales saw a rise in food and drink aimed at larger gatherings and al fresco dining as the extra holidays encouraged socialising outdoors following a very dreich March and April.

“Non-food sales saw strong rises in clothing sales, but also in DIY and horticulture as householders attempted to bring order to their gardens.”

Despite the fruitful month for Scots retailers, Mr MacDonald-Russell added that “stubbornly high inflation” remains the “overarching issue”.

He said: “It’s clear consumers are waiting until items are essential before making purchases, and that there is very little discretionary spending available.

“Whilst there is some hope inflation may start to subside, one slightly better month doesn’t mean the storm clouds over the economy are likely to dissipate any time soon.”

Paul Martin, UK head of retail for KPMG, echoed Mr MacDonald-Russell, stating food inflation “shows little sign of coming down in the near future and is having a significant knock-on effect on non-essential spending”.

He continued: “The grocery sector is the fastest growing part of the consumer wallet at the moment, so they are having to spend more of their money in the one area that is getting disproportionately more expensive.

“Scottish consumers are resilient, but with stubbornly high food inflation continuing and the prospect of further interest rate rises threatening to impact their ability to spend elsewhere, it is likely to be a long, hot summer for the retail sector.”