High expectations pertaining to improvement in retail sales were slapped hard when the Office for National Statistics said that retail sales volumes fell by 1.6 per cent in May, as shoppers cut down on their purchase of clothing, footwear and household goods.

According to the Office of National Statistics total sales volumes recorded a growth of mere 0.6 per cent for the quarter ended May, which was one of the three worst quarterly performances since Dec. 1995.

Chief UK and European economist at IHS Global Insight, Howard Archer thinks that the UK economy is still in a very flimsy state. The UK head of retail at the accountancy firm Deloitte, Tarlok Teji, said, "In the UK, a lot of consumers do have extra disposable income but are behaving with extreme caution.

The fear of unemployment is still very real and will hold back a strong rebound in UK consumer spending for most of this year." In May, Household goods stores suffered a fall of 4.1 per cent in volumes, year on year, but textile, clothing and footwear stores also scored a plunge of 2.2 per cent, food stores declined by 1.3 per cent.

As per Retail Sales Monitor, BRC-KPMG's record UK retail like-for-like sales fell by 0.8 per cent in May. A big shot at PricewaterhouseCoopers, Olivia Gillan is of the view things are improving but one should not expect any kind of sharp recovery in the present year.

ONS's report dragged sterling to a one-week low against the euro.