Dampened UK retail sales

author: FutureCar Staff    

New figures show that Britain's wet summer has had a negative impact on consumer spending on the country's high streets. Retail sales volumes in the UK fell by 1.2% in July, following a 0.6% increase in the previous month, according to the Office for National Statistics. Economists had predicted a smaller fall of 0.5%. Sales volumes at food stores dropped by 2.6%, with supermarkets blaming the cost-of-living crisis and high food price inflation for the decline.

Heather Bovill, deputy director for surveys and economic indicators at the ONS, stated that it was a particularly bad month for supermarkets as the combination of the summer washout and increased cost of living led to sluggish sales in both clothing and food. Department store and household goods sales also saw significant drops. However, the proportion of online retail sales in the UK increased in July as shoppers stayed indoors due to the rain. Online sales volumes rose by 2.8% in July, and 27.4% of retail sales were conducted online, up from 26% in June, marking the highest proportion since February 2022.

Ms. Bovill attributed the increase in online sales to the wet weather, as well as discounts and the convenience of shopping from home. Some retailers now face the challenge of selling surplus stock after not being able to meet their expected sales targets in July. Jason Tooley, vice president at Informatica, warned that markdowns and promotions may help in the short term but could lead to longer-term margin erosion. Despite the challenging conditions, the British Retail Consortium remains cautiously optimistic, hoping that upcoming events such as the Women's World Cup Final, back-to-school shopping, and the new academic year for university students will boost spending. However, the economic environment remains difficult, and the government needs to create conditions that foster economic growth.

The weak retail sales figures are part of a mixed bag of numbers for the UK economy. While there have been strong wage growth figures and a drop in headline inflation, the core Consumer Price Index reading has remained unchanged from June, despite 14 consecutive interest rate rises. This has created confusion regarding the Bank of England's Monetary Policy Committee's decision on interest rates in September. Stuart Cole, chief macro economist at Equiti Capital, believes that the strong wage data and inflationary pressures will be the primary factors driving the decision, and the disappointing spending figures are unlikely to have a significant impact.

FutureCar Staff