Following last week’s news of unexpectedly strong economic growth in June of 0.5 per cent, today’s retail sales figures for July come as something of a shock. Across the month, the volume of sales fells by 1.2 per cent compared with June, and was 3.2 per cent lower than in July 2022. The fall occurred across the board, with food stores falling 2.6 per cent month on month, clothing stores 2.2 per cent and department stores – which had seemed to enjoy a revival in recent months – falling 2.9 per cent. The only positive news was on non-store retailing – i.e. the internet – sales were up 2.8 per cent. Again, this reverses the recent trend of a switch back towards bricks and mortar retailing following the pandemic.
A fall in retail sales ought not to come as a great surprise. Inflation is still three and a half times the Bank of England’s target. Household incomes are being eaten away by rising interest rates. Consumers are struggling. It was more of a surprise that retail sales were so strong in June – although the rise of 0.7 per cent initially recorded in that month has since been revised down to 0.6 per cent.
Last week’s collapse of Wilko, the chain of household goods stores, is a warning sign of misery on the high street. Retail businesses which survived the pandemic thanks to furlough, rent and rate holidays, as well as loans and grants have little protection against a downturn in sales now. Not everyone, though, is doing badly. Just this week M&S announced string results, with food sales up 11 per cent and clothing and household goods up 6 per cent this year.
The usual old excuse has been given by the Office of National Statistics for the downturn in retail sales in July: the weather. But do people really stop going out shopping just because the sun isn’t shining? It is easy to see why, for example, someone might put off the purchase of a summer frock or barbecue set, but then again people stuck indoors because of indifferent weather might be more minded to turn their attentions to DIY. It is hard to wonder whether the financial weather is not the far more important factor here.
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