Retail sales decline due to July rains and high prices

Home > Industry Analysis > Content

【Summary】UK retail sales experienced a significant decline in July due to unseasonal weather and high inflation. Sales volumes dropped by 1.2%, with food store sales being the most affected. The wet weather led to lower footfall in physical stores, driving consumers to shop online. Online retailers reported a sales volume jump of 2.8% in July, contributing to a higher share of total sales volumes. Inflation slowed slightly, but food prices continued to rise. Core inflation remained unchanged at 6.9%.

FutureCar Staff Aug 18, 2023 8:31 AM PT

Retail sales decline due to July rains and high prices

Retail sales in Britain experienced a decline in July, breaking a three-month period of growth, according to the country's main statistical agency. This decline can be attributed to bad weather and inflation, which have contributed to a cost of living crisis. The drop in sales volumes, the largest monthly decline since September, was primarily driven by a fall in food store sales. Unseasonal rains affected supermarket clothing purchases, while retailers reported lower food sales due to rising prices and the cost of living crisis.

In July, food inflation fell to 14.8%, although it remains more than double the headline Consumer Price Inflation of 6.8%. Consumers had to spend 16.4% more in July compared to pre-pandemic levels in February 2020 to purchase 1.8% fewer goods. The Office for National Statistics' analysis highlighted that the wet and cool weather had a significant impact on retail sectors across the board.

Supermarkets were particularly affected by the poor weather and increased cost of living, resulting in sluggish sales for clothing and food. However, the rainy weather did have a positive effect on online retailing, as consumers turned to online shopping from the comfort of their homes. Department store and household goods sales also experienced significant declines.

Non-food store sales volumes fell by 1.7% in July, following a rise of 0.6% in June. Retailers attributed this decline to reduced footfall caused by the poor weather. On the other hand, automotive fuel store sales rebounded in July, thanks to the arrival of the summer travel season. Online retailers reported an increase in sales volumes, attributing it to promotions and discounting. Internet shopping's share of total sales volumes rose to 27.4% in July, up from 26% in June.

The retail sales figures come shortly after the Office for National Statistics reported that falling gas and electricity prices contributed to a decrease in inflation in July. However, inflation remains at a three-decade high. While food prices continued to rise, the rate of increase was slower compared to the previous year. The headline inflation figure was tamed by falls in milk, bread, and cereal prices. Underlying "core" inflation, which excludes volatile items such as energy and food, remained unchanged at 6.9%.