UK retail sales soar despite cost of living crisis | retail industry
Retail sales in the UK rose unexpectedly in July as consumers continued to spend despite concerns over the cost of living crisis.
The Office for National Statistics said sales volume rose 0.3% on the month after a revised 0.2% decline in June, with a raft of online sales helping to show a broader trend for a decline of spending to overcome.
Despite the surge in headline sales, spending on clothing and higher-priced home goods continued to fall as consumers cut back amid concerns about affordability and the cost of living.
The numbers come as households across the country come under pressure as inflation hits its highest level in 40 years.
Separate figures showed that rising inflation pushed government bonds higher-than-expected in July, underscoring challenges to Conservative leader Liz Truss’ tax cut plans.
Highlighting the risk of an economic slowdown, the latest retail sales snapshot showed that clothing store volumes fell 1.2% in July as shoppers tightened their belts amid concerns over the cost of living.
Sales volumes at home goods stores declined 0.4%, mainly due to declines at furniture and lighting stores.
Grocery store volumes rose just 0.1% in July, compared with a monthly growth rate of 2.7% in June, as the Queen’s Jubilee celebrations boosted sales.
Kien Tan, director of retail strategy at PwC, said online promotions like Amazon’s Prime Day event have contributed to the surprising growth in headlines over the last month. “Almost every other retail category continued to decline,” he said.
“With the prospect of further inflation, the concern for retailers is that shoppers will simply have to spend less money as the nights roll in.”
The ONS said public sector borrowing was £4.9 billion in July, a month when government finances are normally in surplus as self-assessed income tax revenues flow into the treasury.
The figure was £800m lower than the same month a year earlier, when the coronavirus pandemic hit public finances, but was well above the £200m deficit forecast by the Office for Fiscal Responsibility.
Chancellor Nadhim Zahawi said the government will support households hit by rising living costs. “I know that rising inflation is challenging families and businesses, and is also putting pressure on public finances by increasing the amount we spend on debt interest,” he said.