UK retail sales experienced a slight increase of 0.5% year on year in July, signalling a recovery.
- Summer clothing and health & beauty products saw improved sales due to late sunshine, boosting overall figures.
- Food purchases played a pivotal role in driving retail growth during the observed period.
- Spending on indoor goods dwindled as consumers prioritised holidays and outdoor activities.
- Retailers anticipate changes in business rates policy following political shifts, preparing for upcoming economic strategies.
Retail sales in the United Kingdom saw a modest increase of 0.5% year on year in July, reflecting a tentative recovery in the market. This data, released by the British Retail Consortium (BRC), covers the period from 30 June to 27 July. The increase occurs against a backdrop of numerous economic challenges that have affected both consumer confidence and spending habits.
The improved sales in summer clothing and health & beauty products can be attributed to the late arrival of the British summer. Helen Dickinson, BRC’s chief executive, noted that the sunshine encouraged shoppers to purchase in preparation for social events and holidays. The seasonal change provided a positive impact on a sector that had previously struggled amid unpredictable weather conditions and economic uncertainties.
A significant factor contributing to the retail upswing was food purchases, which showed a marked increase. The growth in this sector is indicative of shifting consumer priorities, with many opting to spend available finances on essentials and leisure pursuits. However, this shift led to a reduction in spending on indoor goods such as furniture and household appliances, highlighting a change in consumer behaviour influenced by external factors.
The political climate, as noted by Dickinson, also played a critical role, with the resolution of election-related uncertainties allowing for a focus on economic growth. The retail sector is now looking towards the Autumn Budget for potential reforms in business rates, crucial for future investment strategies. The new Labour government’s promises regarding the reform of the business rates system are seen as a beacon for many retailers hoping for financial relief.
Linda Ellett from KPMG highlighted that household spending remains sensitive to economic pressures. The ability of consumers to cope with rising living costs, particularly in housing, continues to dictate discretionary spending. Wage growth in certain sectors contrasts with others facing job cuts, resulting in a mixed economic landscape where the potential need to rely on savings is a genuine concern for many.
The retail sector is cautiously optimistic, focusing on strategic adjustments to navigate economic changes.
