Delayed data released today by the Office for National Statistics (ONS) shows UK retail sales rose more than expected in July, boosted by good weather and the women’s European football championship. However, annual growth was slower than expected following extensive revisions to the data for previous months.
Sales volumes during July increased 0.6%, ahead of economists’ forecasts of a 0.2% rise.
Non-food store volumes rose by 0.6%, driven by clothing chains, while food stores suffered a 0.2% fall. However, there was 2.5% boost from non-store (online) retailers, which was put down to the weather.
The annual growth rate came in slightly below forecast at 1.1% and sales fell 0.6% in the three months to July.
The revised data showed June’s monthly growth rate was 0.3% compared to a previous figure of 0.9%. There were significant other corrections to past data, with supermarkets having the largest contribution to revisions over the last 12 months, followed by mail-order retailers. Non-food stores volumes (a category comprising department, clothing, household, and other non-food stores) were little changed.
The ONS had delayed the latest data release to allow more time to correct previous seasonal adjustments that had not accounted properly for holidays such as Easter and the different lengths of different months’ collection periods for retail data.
“The retail sales figures are a bit softer than they look,” said Paul Dales, chief UK economist at Capital Economics. He noted that the revisions left sales volumes 0.5% below where they had been previously, and July’s boost largely reflected one-off factors.
Nicholas Found, Head of Commercial Content at Retail Economics, added: “Despite heatwaves and a summer of sport giving some areas of retail a welcome lift in early July, sales momentum across categories is patchy beneath the surface, including food facing renewed pressure from price rises. “Homewares and fashion continue to rely heavily on promotions rather than a meaningful recovery in demand. That said, we’re seeing selective spending in categories benefiting from innovation in technology and wellbeing.”
He concluded: “With the Autumn Budget looming, new concerns around tax and borrowing costs are weighing on sentiment. Retailers are already grappling with a wave of structural cost pressures, from wages to business rates. With the Budget falling late into this year’s golden quarter, there’s a real risk that uncertainty could choke discretionary spending just as retailers gear up for their most critical trading period.”
NAM Implications:
- Those closer to the better-performing categories…
- …are in a better position to optimise performance.
- But the rest of us cannot be encouraged by ONS having to correct previously issued stats.
- Even more so, the shoppers…
- Causing the (inevitable) reluctance to spend…
