The value of UK retail sales in July was up only 1.7% on the same month last year, the third-poorest annual growth rate in the industry's own monthly figures since spring 2006, the British Retail Consortium will reveal today.
The value of UK retail sales in July was up only 1.7% on the same month last year, the third-poorest annual growth rate in the industry's own monthly figures since spring 2006, the British Retail Consortium will reveal today.
The BRC's latest survey shows a slowdown in the year-on-year increase in total sales value from 2.1% in June. July's annual rise of 1.7% is even further adrift of the 4.6% year-on-year increase in sales during a buoyant May.
Since March 2006, when retail sales were up 1.6% year-on-year, the July rise is the third weakest. It is not quite as bad as respective year-on-year increases of 1.1% and 1.0% this March and April, but the latest number does add significantly to a developing picture of ever-tougher times on the high street as the global credit crisis bites.
On a like-for-like basis, a measure which strips out the beneficial impact of net expansion of retail space, the BRC notes that UK retail sales value has now been below year-earlier levels for four out of the last five months. Only in May did this measure show a year-on-year rise.
Sales in July were, like-for-like, 0.9% lower than in the same month last year.
The like-for-like measure shows how retailers are faring, and is thus preferred by the BRC. The movement in total sales gives a much better indication of overall consumer spending and therefore the macroeconomic outlook.
In the latest BRC survey, both measures point to much tougher times on the high street and are consistent with the sharp economic slowdown evident in official data and business surveys.
This high-street weakness supports the general belief among economists that the Bank of England's Monetary Policy Committee will not want to raise base rates from 5% to counter inflationary pressures, given the detrimental impact such a move could have on growth. Economists expect the next move in rates will be down, although they do not view a cut as imminent.
The BRC survey shows food sales remained strong in July.
However, furniture and carpet stores continued to suffer at a time when housing market activity has slowed dramatically and residential property prices are tumbling.
The BRC survey reveals that like-for-like sales of furniture and floor coverings were, in July, below year-earlier levels for the sixth consecutive month.
On this like-for-like basis, clothing sales last month fell further below their year-earlier level with May's sun-driven strength a distant memory.
Footwear sales last month were on this basis below their July 2007 level, in spite of heavy discounting, although the BRC declares: "Sandals sold well on sunny days."
Helen Dickinson, head of accountancy firm KPMG's retail sector business, said: "July saw a continuation of June's trend, with food inflation and the wider economic climate continuing to impact consumer retail spending. As July 2007 was one of the worst-performing months of last year, total sales growth of just 1.7% in July 2008 highlights how disappointing a month it was for all retail businesses.
"Although total retail sales and food sales grew compared (with) the same period last year, the non-food sector contracted for the second month in a row. The furniture and home-related sectors continue to bear the brunt of falling consumer confidence and increasing demands on household budgets. Women's footwear was the only highlight in the clothing and related sectors, perhaps suggesting a need for a personal treat in the midst of all the gloom."
Stephen Robertson, director-general of the British Retail Consortium, said: "Four of the last five months have now seen negative like-for-like annual sales growth and, in July, every sector except food recorded falls. Frivolous shopping is off the agenda as most customers concentrate on value and durability and there are few signs the slowdown has yet bottomed out."
