LONDON: UK high street sales remained flat in July as spending in supermarkets on food bolstered declining sales across all other main sectors. The Office for National Statistics said growth in retail sales volumes was static at 0.3% after revising the figure for June down to the same level, although the result still beat analysts’ expectations for a modest rise of 0.2%. Strong food sales in stores at 1.5%, up from 1.1% a month earlier, helped offset a decline elsewhere, said Ole Black, an ONS senior statistician. “While the overall growth is the same as in June, trends in growth in different sectors are proving quite volatile,” he said.
The annual rate of sales volumes was 1.3% in July, down from 2.8% in June and considerably lower than the higher rates towards the end of 2016. High street stores selling clothing and footwear were among the hardest hit, experiencing a fall of 0.5% in July compared with a month earlier. Online sales increased by 15.1% year on year and by 0.3% month on month, accounting for approximately 16% of all retail spending. B&Q and Screwfix owner Kingfisher, Europe’s largest home improvement retailer, reported on Thursday that second quarter sales had slumped, driven by a 10.7% decline in the sale of seasonal goods such as barbecues and garden furniture at B&Q, following a strong first quarter boosted by better weather.
Wet weather in July also affected fashion sales, with worse conditions possibly on the horizon for retailers, said Keith Richardson of Lloyds Bank. “It’s hard to escape the feeling that there may be dark clouds on the way,” he said. The figures come as the economy shows greater signs of resilience than expected, with the UK recording its lowest level of unemployment since the mid 1970s. Inflation remains steady at 2.6%, thanks to falling fuel prices, alleviating some of the squeeze on real wages at a time when households are facing uncertainty from Brexit. However, rail fares will rise by 3.6% from next year, after July’s retail price index came in higher than expected on Tuesday, leading the government to prepare the steepest hike in average ticket prices for five years. Howard Archer, the chief economic adviser to the EY Item Club, said the retail sales figures showed continuing consumer caution amid squeezed purchasing power and weakened confidence. “The squeeze on consumers remains appreciable, despite easing marginally from May’s peak,” he said.
