UK Retail Sales Fall More Than Expected in July Due to Poor Weather
London, United Kingdom – British retail sales experienced a larger than anticipated decline in July, according to official data released on Friday. The Office for National Statistics (ONS) reported a 1.2 percent decrease in retail sales volumes last month, worse than the forecasted 0.5 percent decline by economists.
The drop in sales comes after a surprising increase in June, which was attributed to warmer weather and competitive pricing as inflation gradually cools. Analysts suggest that this latest data may indicate a dent in consumer confidence following over a year of rising interest rates.
Heather Bovill, the ONS deputy director for surveys and economic indicators, stated that the poor weather significantly impacted most sectors, with supermarkets experiencing particularly sluggish clothing and food sales. Department stores and household goods sales also saw significant drops.
Food stores sales volumes dropped by 2.6 percent in July, while non-food stores sales fell by 1.7 percent. Interestingly, online retailers benefited from the wet weather, with 27.4 percent of all retail sales occurring online, the highest proportion since February 2022.
Capital Economics, in its analysis, expressed a downbeat outlook for overall consumer spending this year. It attributed the decline to the continuing effects of the Bank of England’s interest rate hikes and falling consumer confidence. The research firm predicts a peak-to-trough fall of 0.5 percent in real consumer spending as a result.
The UK has been grappling with a cost-of-living crisis and weak economic growth. Analysts warn that the country remains at risk of recession this year, especially after the Bank of England raised interest rates more than a dozen times in an attempt to tame inflation.
