In July, retail sales in the UK experienced a bigger decline than anticipated, largely due to the unseasonably wet weather throughout the month. According to data from the Office for National Statistics (ONS), retail sales volumes decreased by 1.2% compared to June's 0.6% increase. Economists polled by The Wall Street Journal had predicted a more modest 0.4% decline.
The ONS reported that food store sales volumes saw a significant drop of 2.6% in July. Supermarkets specifically cited reduced clothing sales due to the rainy weather, though food sales also declined during this period.
This disappointing reading comes as a blow to retailers who were hoping to attract consumers during the traditional summer promotional period. The Met Office revealed that July 2022 was the wettest July since 2009 and the sixth wettest on record since 1836. However, it's not just the adverse weather conditions impacting sales. The ONS noted that the UK's economic challenges, including rising living costs and soaring food prices, have also played a role in declining sales volumes.
Inflation remained elevated in July at 6.8%, although it dipped slightly from the previous month. Food prices, in particular, were 14.9% higher compared to July 2022.
Given that inflation is well above the Bank of England's 2% target, it is expected that interest rates will be increased from the current rate of 5.25% next month. This further tightening of monetary policy may put additional pressure on consumer spending.
Non-food stores also experienced a decline in sales volumes, falling by 1.7% in July. Retailers attributed this decrease to the impact of weather conditions on footfall. On the other hand, sales volumes in automotive fuel stores saw a slight increase of 0.7% compared to the 0.6% decline in June.
Interestingly, online shopping received a boost from the poor weather, accounting for its highest share of retail sales at 27.4% since February 2022.
Looking at the less volatile measure of sales in the three months leading up to July, volumes increased by 0.1% compared to the previous quarter. However, on a year-on-year basis, sales volumes were down by 2.4%.
Overall, the July retail sales figures reflect the combined impact of unfavorable weather conditions and ongoing economic challenges in the UK. Retailers will need to carefully navigate these factors to attract consumers and stimulate sales in the coming months.
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