YEAR-on-year growth in UK retail sales value slowed sharply in July, to a sub-inflation rate, fuelling fears over consumers' ability to help the economy clamber out of renewed recession.
A survey published today by the British Retail Consortium shows the total value of UK retail sales last month was up 2% on July last year. This represents a sharp deceleration in the year-on-year growth rate, with the value of sales in June having been up 3.5% on the same month of 2011.
The Scottish Retail Consortium will reveal on August 15 how sales north of the Border fared in July. Scotland recorded far weaker year-on-year growth in sales value in June than the UK as a whole – its 15th consecutive month of underperformance on the SRC-BRC measure. Scottish sales value in June was up just 1.2% on the same month of 2011.
Stephen Robertson, director general of the British Retail Consortium, noted that the 2% year-on-year rise in UK retail sales value in July was less than the most up-to-date 2.4% rate for annual UK consumer prices index inflation recorded for June.
He said: "July was clearly not a golden month for retail. Total [sales] growth of 2% was still behind inflation as consumers, dealing with squeezed budgets, prioritised their spending on essentials."
Year-on-year sales growth was muted overall in spite of stronger demand for clothing in July. Extended clearance sales boosted clothing volumes at the expense of profit margins.
Cooler wet weather for much of the month triggered demand for new autumn ranges, while a warmer end to the month provided a boost to summer clothing and beachwear. Sales of womenswear were weakest, with children's clothing again the stand-out category.
Food sales received a boost in late July from consumers stocking up for Olympic Games-related parties, but this did not make a big difference overall. Sales of outdoor do-it-yourself goods and gardening products were dampened by poor July weather.
Helen Dickinson, head of accountancy firm and survey sponsor KPMG's retail practice, said: "Sadly July was a lacklustre month and it's doubtful this trend will change as early expectations that the Olympics will raise retailers' fortunes look to be wide of the mark. Central London's retailers are already being hit hard by shoppers actively avoiding the capital. It's likely that any blip of benefit the Games bring will be short-lived."
She added: "The lack of any feelgood factor encouraging consumers out into the shops has provided a set of figures much more indicative of the true underlying trend. These show weakness in sentiment as disposable incomes remain squeezed, despite the fall in headline inflation.
"It's a real challenge for retailers to grow sales and many are only achieving this at the expense of margins."
Mr Robertson said: "After the June wash-out, more wet weather in July continued to stifle demand for outdoor gear. There was a boost for food retailers towards the end of the month as the sunshine came out and shoppers started getting in party food and drink ahead of the Olympics but it wasn't a significant help."
He added: "The brightest spot was clothing and footwear, thanks to cooler weather coinciding with autumn ranges reaching the shops. Consumers responded enthusiastically to the chance to refresh wardrobes with items they could make use of straightaway."
The latest BRC survey covers the July 1 to 28 period.
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