UK retail sales strong in July but rising costs cloud outlook: BRC

UK total retail sales rose by 2.5 per cent year-on-year (YoY) in July, compared with 0.5 per cent growth in July 2024, exceeding the 12-month average growth rate of 1.9 per cent, according to British Retail Consortium (BRC).

Non-food sales grew by 1.4 per cent YoY, reversing a 1.8 per cent decline in July 2024 and outperforming the 12-month average of 0.8 per cent. In-store non-food sales rose 1.9 per cent, compared with a 3 per cent fall last year, while online non-food sales edged up 0.3 per cent, matching last year’s growth but falling short of the 12-month average of 1.9 per cent.

The online penetration rate for non-food items slipped to 34.8 per cent in July, down from 35.1 per cent a year earlier, and remained below the 12-month average of 36.7 per cent.

“Fashion sold well early in the month, but deteriorated as weather worsened, while homeware and indoor furniture grew steadily, recovering from the previous year’s decline. With sales growth at these levels, it is barely touching the sides of covering the £7billion (~$9.42 billion) new costs imposed on retailers at the last Budget,” Helen Dickinson, chief executive of the British Retail Consortium, said in a release.

“If the upcoming Autumn Budget sees more taxes levied on retailers’ shoulders many will be forced to make difficult choices about the future of shops and jobs, and ongoing pressure would push prices higher. Ultimately, this means more families struggling, particularly those on lower incomes, reduced consumer spending and a drag on economic growth,” Dickinson added.

“With employment costs having risen and inflation both a business and consumer side pressure, it remains a challenging trading environment for many retailers. While the majority of consumers that KPMG surveys are confident in their ability to balance their monthly household budgets, big ticket purchases are more considered in the context of rising essential costs and ongoing caution about the economy and labour market.  Holidays are the priority for many this summer but those heading away have had to account for a higher cost of travel.  Consequently, spending in some areas of the retail sector remains subdued and competition for consumer spend will remain fierce,” commented Linda Ellett, UK head of consumer, retail & leisure, KPMG.

ALCHEMPro News Desk (HU)