Retail sales in the UK fell last month by more than forecast as cautious consumers reined in their spending amid a chilly and wet start to summer and election uncertainty.
Official data from the Office for National Statistics (ONS) shows retail sales volumes slipped 1.2% in June following a 2.9% rise the previous month. City economists had predicted a shallower 0.4% decline.
Non-food stores sales volumes were down 2.1% in June after a rise of 3.3% in May. All sub-sectors fell over the month, with strong downward contributions from department stores, clothing and footwear retailers, and furniture stores amid weak retail footfall.
Meanwhile, food stores saw volumes fall by 1.1%, mainly due to weakness in supermarkets. Retailers told the ONS that trading was impacted by poor weather and economic conditions, which held back household spending.
Lisa Hooker, PWC’s leader of industry for consumer markets, noted that shoppers were still reluctant to spend despite the fall in inflation, wage increases and lower national insurance contributions.
“It appears that the cooler, wetter weather over spring and early summer, combined with longer-term uncertainty in the period prior to the general election, has discouraged shoppers from both buying seasonal goods and making longer-term big-ticket purchases,” she said.
Hooker noted that while July had got off to a wet and chilly start, retailers will be hoping that the return of warmer weather, longer-term political stability and England’s relative sporting success will encourage consumers to return to the high street, albeit “probably too late to save the summer season sales for some retailers”.
The figures come as the Bank of England considers whether to cut interest rates at its next policy meeting on 1 August. Financial markets predict that the Bank will keep rates on hold after underlying measures of inflation in the service sector remained higher than anticipated.
