News Update


Rain dampens demand, causing retail sales to fall in July.

According to the Office for National Statistics (ONS), supermarkets had a particularly terrible month.

“The summer washout, combined with the increased cost of living, meant sluggish sales for both clothing and food,” it explained.

Household goods demand was also down at department stores.

To demonstrate how much prices have climbed, the ONS reported that overall retail sales were 16.4% higher in value but 1.8% lower in volume compared to February 2020, the last full month before Covid hit.

Earlier this week, new data revealed that inflation, which measures the pace at which prices rise, had slowed to 6.8%. Food prices, on the other hand, continue to rise rapidly.

According to the ONS, supermarket sales volumes dipped 2.6% in July after increasing in June.

It stated that “some of the fall was due to poor weather, which reduced summer clothing sales.” However, food sales in supermarkets have also declined.”

Retail sales declined more than projected between June and July. Economists had predicted a 0.6% decline.

Ruth Gregory, Capital Economics’ deputy chief UK economist, cautioned against reading too much into the retail sales data because it “had a lot to do with last month being the sixth wettest July since records began in 1836.”

“However, with the Bank of England’s interest rate hikes still being felt and consumer confidence falling, we remain pessimistic about overall spending this year,” she said.

Inflation is slowing, but airfares and hotel prices remain high.
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Between June and July, sales volumes at department stores fell 2.9%. In addition to apparel, they observed a decrease in demand for furniture and lighting.

Customers modified their purchases because of the bad weather, according to some shops.

Gary Grant, founder and chairman of the toy shop The Entertainer, told the BBC’s Today programme that parents had spent more money on goods to keep their children entertained during the rain.

While outdoor toy sales were “substantially down” compared to the previous year, “our indoor sales, whether that be our stationery items, craft items, puzzles, games, things that you would need to keep your children occupied in the house, those sales have increased,” he said.

The weather also aided online businesses by keeping customers at home, with sales increasing by 2.8% in July.

In total, internet retail sales increased to 27.4% last month, the highest level since February, from 26% in June.

Meanwhile, the ONS revised down the June retail sales gain from 0.7% to 0.6%.

According to Silvia Rindone, managing partner of strategy and transactions at the accounting company EY, sales may go up in August as youngsters prepare to return to school.

“Retailers should see an increase in sales in August as families begin to shop for the start of the new school year in September.” “‘Back to school’ is frequently the second-highest spending season in retail after Christmas,” she explained.

Looking ahead to the holiday season, Mr Grant stated that consumers tend to postpone major purchases until the last few months of the year.

While The Entertainer is already benefiting from the popularity of the Barbie film, particularly doll and clothing sales, things such as Barbie’s caravan or her house, which can cost up to £300, will be “the big Christmas present,” he said.


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