UK retail sales volumes declined by 0.5% in July compared with the previous month, as clothing sales fell at the fastest rate for more than a year, according to official figures.
The Office for National Statistics (ONS) said the decline followed 0.7% growth in June, which was revised down by statisticians from a previous estimate of 1% for the month. July's fall was marginally larger than expected, as economists had predicted a 0.4% decline.
Clothing and online sales slump
Sales from clothing and footwear retailers slid by 2.7% for the month, representing the sharpest drop since May last year. Experts linked this to many retailers bringing promotions and discount activity forward into June, helping drive sales that month but resulting in a drop off in July.
Non-store retailers, which primarily covers online retailers, also saw a particular slump in July, with sales sliding by 3.6%. Household goods stores were also in decline, reporting a 1.9% monthly drop.
Food and drinks buck the trend
Food sales grew by 0.5% over the month as warm weather continued to benefit supermarkets. The data also showed that retailers selling alcoholic drinks “performed well” due to promotions, the hot weather and the final stages of the World Cup.
The ONS said retail sales volumes increased by 1.1% over the three months to July, compared with the previous three months.
Experts weigh in on the outlook
ONS chief economist Grant Fitzner said: “Retail sales increased in the latest three months, with all main sectors, apart from motor fuel, seeing growth. Some retailers told us that hot weather and promotions helped sales of outdoor products and items such as fans, with clothing and online sports merchandise also doing well.”
Jacqueline Windsor, head of retail at PwC UK, said: “While successive heatwaves and World Cup celebrations earlier in the month helped grocery sales – of everything from beer to picky bits – the earlier timing of discounting and promotions meant that some large online and fashion retailers in particular pulled forward sales into June that would previously have been in July. Higher inflation, notably the higher energy price cap and higher petrol prices later in the month, also meant less money in shoppers’ pockets for discretionary spending outside of grocery and fuel. Despite less promotional activity from online retailers, the high street failed to benefit as heatwaves continued to impact footfall.”
Matt Swannell, chief economic adviser to the Item Club, said: “The retail sector is likely to face a challenging H2 as households’ real incomes come under further pressure. Inflation has already started to rise in July and we expect it to increase further over the next six months, reaching 3.5% before year-end. At the same time, weak demand will keep a lid on pay gains and lead to a modest rise in unemployment.”
