The UK’s latest retail data reveals a drop in food sales amidst ongoing economic pressures.
- Retail sales volumes fell by 1.2% in July, revealing a harsh consumer landscape.
- Supermarkets see a shift to online as bad weather impacts in-store sales.
- The price increase of food and non-alcoholic beverages reaches nearly 15%.
- Industry experts express concerns over the long-term outlook for consumer spending.
The latest figures disclosed by the Office of National Statistics indicate a 1.2% decrease in retail sales for July, following a 0.6% growth in June, outlining the challenging environment facing consumers. The retail sector is grappling with pressures, notably highlighted by a 2.6% decline in food store sales volumes, contrasting with a prior 1.1% increase the previous month.
The data unveils consumer behavioural shifts, with a notable rise in online shopping – accounting for 27.4% of retail sales in July. This shift is attributed to adverse weather conditions and increased promotions, driving consumers towards digital platforms, marking the highest proportion of online sales since February 2022.
Supermarkets reported not only a decline in food sales but also attributed the poor weather to reduced sales in summer apparel, impacting overall retail performance. In spite of these challenges, automotive fuel store sales saw a slight recovery with an increase of 0.7% in July, following a decrease in June.
Economic factors remain a crucial component affecting the retail landscape. The Consumer Price Inflation report highlights a significant 14.9% rise in the cost of food and non-alcoholic beverages over the twelve months leading to July 2023, putting considerable strain on consumer budgets. Additionally, food store sales volumes are 5.1% lower than pre-pandemic levels observed in February 2020.
Ruth Gregory, the deputy chief UK economist at Capital Economics, remarked on BBC: “The sixth wettest July since records began has influenced the statistical outcome, but with the Bank of England’s interest rate hikes and declining consumer confidence, we remain cautious about spending dynamics this year.” Meanwhile, warnings about the long-lasting impact of the geopolitical tensions stemming from Russia’s incursion into Ukraine lend further weight to concerns over future food pricing.
The combination of adverse weather conditions and significant economic pressures continue to challenge the UK retail sector’s resilience.
