UK retail sales tick up in July after summer discounts and Euros boost
Friday's data is among a raft of economic figures released this week that will provide key indicators for Bank of England policymakers as they decide whether to cut interest rates in September.
UK retail sales ticked up in July, partly reversing a plunge the month before, as summer discounts and major sporting events offered a boost to department stores and sportswear shops.
Retail sales volumes rose 0.5 per cent in July, according to data from the Office for National Statistics (ONS). The figure came in marginally below economists’ expectations of 0.6 per cent growth.
The data marked a partial recovery from a much worse than expected drop of 0.9 per cent – revised from an initial estimate of 1.2 per cent – in June, partly caused by poor weather reducing footfall.
Non-food store sales rose 1.4 per cent over the month – after a 1.9 per cent plunge in June – with department stores growing sales by four per cent.
The ONS said sales volumes in department stores and sports equipment retailers “grew strongly”, as businesses signalled summer discounting and sporting events, like the Euros, boosted sales.
A busy summer of televised sports, including Wimbledon and the Olympics, has boosted demand for TVs, tablets and sportswear.
Clothing and footwear shops saw a 0.6 per cent dip in sales, while homeware retailers saw volumes fall 0.6 per cent. Sales at food stores remained flat for the month.
Easing inflationary pressures and lower interest rates are expected to provide a boost to consumer spending for the remainder of this year.
“Retail sales grew in July led by increases in department stores and sports equipment shops, with both the Euros and discounting across many stores boosting sales,” said ONS director of economic statistics Liz McKeown.
“These increases were offset by a poor month for clothing and furniture shops, and falling fuel sales, despite prices at the pump falling.”
The sales figures are the latest in a raft of economic figures released this week that will provide key indicators for Bank of England policymakers as they decide whether to cut interest rates in September, after doing so for the first time since March 2020 earlier this month.
ONS numbers showed inflation moved away from the Bank’s two per cent target to hit 2.2 per cent in July – the first increase this year but below economists’ expectations of 2.3 per cent – while wage growth slowed to its lowest level in more than two years in the three months to June.
Figures out on Thursday showed the UK economy grew 0.6 per cent in the second quarter of 2024, in line with expectations, as it continued to bounce back from a shallow recession.
“While retailers will be hoping that August’s interest rate cut and heatwave have paved the way for another good month of trading, they’ll also be mindful of the impact that the recent inflation rise may have on consumer confidence,” said Paul Harland, consumer and retail expert at Lloyds Bank.
Kien Tan, senior retail advisor at PwC UK, added: “Despite perhaps a disappointing performance for parts of the retail sector in July, we do expect further recovery in the short-to-medium term.
“The summer weather finally reaching the country this month will be better news for grocery and fashion; and the more favourable economic backdrop of higher wages, lower inflation and lower interest rates augur well for spending more widely in the run-up to Christmas.”
