Retail sales slump despite higher real wages
Retail sales fell faster than expected with department stores particularly badly hit.
UK retail sales have come in even worse than expected.
According to the latest figures, excluding fuel, retail sales fell 1.5 per cent month-on-month in June compared to the 0.5 per cent decline pencilled in by analysts.
According to the Office for National Statistics, volumes in all retail sectors fell, with the exception of petrol. Fuel sales rose more than 2.1 per cent for the period.
Including fuel, retail sales fell 1.2 per cent.
The biggest decline was recorded for department stores. Sales in this category fell by more than 3.1 per cent during the month of June.
Matt Jeffers, retail strategy and consulting managing director for Accenture in the UK & Ireland said: “The sector will hope to buck this trend in July, with the prospect of the Euros and Wimbledon finals likely to drive stronger sales. While the Olympics may provide another boost in late summer, retailers should be thinking about how they can reignite sales momentum for the remainder of the year.
“Sharpening their product and value propositions will be crucial as consumers remain persistently discerning about what, where and when they are willing to make a purchase.”
The data followed the latest reading from the GfK consumer confidence survey. The GfK index recorded a reading of -13 in July, which, while still negative, was the fourth consecutive month of improvement and the highest reading since September 2021.
GfK’s Joe Staton said: “July’s consumer confidence poll suggests a note of caution as people wait to see exactly how the UK’s new government will affect the wider economy and their personal finances.”
Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said: “We think that consumers’ confidence will continue trending up as real incomes power forward this year, while the prospect of interest rate cuts from the Bank of England help too.”
Jordan-Doak added: “Real average weekly earnings growth excluding bonuses rose to 3.2 per cent year-over-year in the three months to May—the latest month for which wage data are available—and will likely rise further by June as wage growth remains strong and inflation remains subdued. Real wages have now been rising for eleven straight months and we expect their growth to slow only gradually to 2.6 per cent year-over-year in December.”
