Despite continued talk of the credit crunch, UK retail sales increased last month compared with the same period in 2007, according to figures released by market watcher KPMG.

Sales rose 1.9 per cent on a like-for-like basis compared to last May when sales role 1.8 per cent.

However KPMG claimed that underlying trade conditions still remain tough with widespread discounting. Unsurprisingly consumer confidence has dropped sharply, and increasing demands on household budgets and the weak housing market means shoppers are price conscious and are looking to bag a bargain.

Stephen Robertson, director general of the British Retail Consortium (BRC), said: “After several mostly miserable months, warm sunny weather finally arrived in early May and helped lift customers' gloom. Significantly clothing sales saw year-on-year growth for the first time since last August, while sales of footwear, outdoor leisure and gardening goods also rose. But we are not out of the woods yet. The economic fundamentals remain weak. BRC confidence figures show the economy is the major concern for a third of people. The housing slowdown and tighter household budgets meant that, despite heavy discounting, furniture sales were well down on a year ago and there was a continued slowdown for electrical goods.”

Helen Dickinson, head of retail at KPMG, said: “May's figures represent a significant improvement on the previous couple of months and were achieved through a much more consistent performance across the different sectors, the exception being anything home-related, particularly big-ticket electricals which continue to struggle.
“Clothing sales growth performed much more in line with food in pound (as opposed to volume) terms which is the first time for many months, with women's and children's footwear being the highlights. However, promotional activity across all sectors was the order of the day and, as the weekly performance deteriorated as the month progressed, along with the weather, there will be few hailing May's results as the benchmark for the coming months. The pressures on consumer retail spending continue.”