The seasonally-adjusted trade figures, published yesterday by the Office for National Statistics, underline the continuing challenges facing the UK economy in spite of a recent run of brighter data and surveys on activity.
According to the ONS, the UK's global goods trade deficit widened from £8.17 billion in June to £9.85bn in July, as exports fell from £26.8bn to £24.8bn.
The City had predicted a July goods trade deficit of £8.15bn.
The UK's goods trade deficit with countries outside the European Union widened from £2.81bn in June to £4.53bn in July, as exports to these nations dropped from £14bn to £11.8bn.
Taking in services as well as goods, the UK's trade deficit with the rest of the world widened from £1.26bn in June to £3.09bn in July.
Separate seasonally-adjusted figures published yesterday by the ONS showed UK manufacturing output edged up by 0.2% in July, having leapt 2% month-on-month in June. Manufacturing output in July was 0.7% lower than in the same month of last year.
Broader industrial production, which includes oil and gas extraction, mining and quarrying, and electricity, gas and water supply as well as manufacturing output, stagnated in July and was down 1.6% on the same month of last year. Oil and gas extraction rose 0.5% month-on-month in July. But there was a drop in electricity and gas output, which may have reflected warmer weather.
An inflation attitudes survey published yesterday by the Bank of England showed the forward guidance on interest rates implemented under new Governor Mark Carney has had a significant impact on households' expectations of the monetary outlook.
The Bank's Monetary Policy Committee said last month it did not intend to raise UK base rates from their record low of 0.5% until the International Labour Organisation measure of unemployment fell from its current level of 7.8% to a "threshold" of 7%. It does not expect unemployment to fall to this level until 2016, and Mr Carney has said the MPC will not raise rates automatically when the 7% jobless rate is achieved.
A survey of 2050 people in the UK, conducted by pollster GfK NOP for the Bank, showed the proportion expecting a rise in base rates over the next 12 months had fallen to 29% from 34% in the previous survey in May. The 29% reading was the lowest since November 2008.
Samuel Tombs, UK economist at consultancy Capital Economics, said: "July's figures showed the industrial sector is still recovering, although the drop in exports was concerning. The Bank of England's Q3 inflation attitudes survey suggested that forward guidance has been more successful in shifting households' expectations for interest rates than those in financial markets."
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "Following a recent stream of good news on the UK economy, the latest trade data and, to a much lesser extent, industrial production figures, temper some of the optimism.
"While GDP (gross domestic product) growth in the third quarter still seems likely to exceed the 0.7% in the second quarter, we suspect it will come in around 0.8% to 0.9% rather than reach or even exceed 1% quarter-on-quarter as had been starting to look very possible."