Retail sales volumes in the United Kingdom fell by 0.5% in July, marking the first monthly decline in three months. The decrease, steeper than the 0.4% economists had predicted, was primarily driven by a sharp drop in clothing and footwear sales. This marks a shift from June, which saw a revised 0.7% increase in retail sales volumes.
The Office for National Statistics (ONS) reported that non-food sales were weaker as retailers had advanced summer promotions into June to capitalize on hot weather, leaving fewer discounts available in July. Clothing and footwear sales slumped by 2.7% last month, the largest monthly decrease since May of the previous year, while sales of household goods declined by 1.9%.
This downturn was partially counteracted by a 0.5% rise in food sales, supported by continued warm weather that boosted supermarket spending. Retailers specializing in alcoholic drinks also reported strong performance, attributed to heatwaves and the final stages of the World Cup. \n
Despite the monthly setback, overall retail sales volumes increased by 1.1% over the three months leading up to July compared to the preceding three-month period. This broader trend saw growth across most sectors, with the exception of motor fuel.
Retailers have been facing pressure from higher taxes and subdued consumer spending. Experts note that increased inflation, particularly concerning energy and fuel prices, has reduced disposable income for non-essential purchases. Although online retailers offered fewer promotions, the high street did not benefit, with heatwaves reportedly impacting footfall.
Looking ahead, the retail sector is anticipated to face challenges in the latter half of the year as household real incomes are expected to come under further strain. Inflation is projected to rise further, potentially reaching 3.5% before the end of the year.
In a somewhat more positive sign for consumer sentiment, the GfK consumer confidence survey rose by two points to -14 in July, its highest level in two years, suggesting growing optimism about personal finances among households.