"The Pound is already slipping": Experts share how falling retail sales will hit the economy

EXPERTS have revealed how falling retail sales will hit the UK economy with evidence of the Pound already slipping today.

Retail sales have fallen by 2.7% in May 2025, following a rise of 1.3% in April 2025, new ONS figures out this morning show. 

Food store sales volumes fell back in May. This followed a strong rise in April which retailers attributed to the good weather. 

Despite this fall on the month, sales volumes rose by 0.8% in the three months to May 2025 when compared with the three months to February 2025. 

Monthly sales volumes had their largest fall since December 2023, in May 2025.

The Pound was down against the dollar from 1.350 to 1.346 this morning, and against the Euro 1.171 to 1.169.

Harry Mills, Director at Oku Markets, said the latest figures are deeply worrying for the country.

He added: “This paints a negative picture for the UK economy - a consumer-led economy, with spending a key barometer of confidence and feelings of prosperity, or otherwise. A frugal summer lies ahead.

"UK Retail sales dropped 2.7% in May, the steepest fall since December 2023, led by a sharp decline in food sales and weaker demand for clothing and household goods. 

"Retail sales data tend to be choppy and are influenced by seasonal trends and the weather, so we mustn't get too excited by large swings in m/m data, rather observing the overall trend. Interestingly, the y/y number was also down considerably, dropping 1.3%, which was the worst performance since April last year! 

“The m/m jump in April was mostly due to food store sales, and May's subsequent decline was influenced by reduced supermarket sales, but non-food stores were also down 1.4%.”

Prem Raja, Head of Trading Floor at Currencies 4 You, said there is already evidence of the Pound weakening today.

He continued: “Retail sales dropped 2.7% in May, the biggest monthly fall since Dec 2023 - after a decent 1.3% rise in April. The drop was mainly down to food sales falling back after a strong April boosted by good weather. 

"While the 3-month figures still show a 0.8% rise, the monthly data points to a clear slowdown in consumer spending. That’s not great news for the UK economy and could add more pressure on the Bank of England to cut rates sooner rather than later. The Pound is already slipping this morning after this weak data, with markets now more likely to price in a cut by August. 

"If poor data continues and inflation keeps trending lower, it’s hard to see the BoE holding out much longer. This could keep GBP under pressure in the short term, especially against currencies like the USD where rate cuts are less imminent."

Tony Redondo, Founder at Cosmos Currency Exchange, said the Pound is already at a seven-week low against the Euro, and that will likely get worse.

He added: “The largest drop in UK retail sales volumes since December 2023 is hardly surprising given the woeful state of the UK economy, as the impact of ‘Awful April’ tax rises starts to take their toll. 

"The sharp fall suggests economic momentum is faltering, potentially dragging GDP growth. Markets may see increased volatility, with gilt yields rising as fiscal concerns grow. Equities, especially retail stocks, could face pressure, though food retailers will be the last affected. 

"The downside pressure on the Pound, already at a seven-week low against the Euro, will intensify as confidence in UK growth wanes. The Bank of England is now expected to cut interest rates not once but twice before the end of 2025 will further depress the Pound.”