Warm weather boosts retail sales, but fall slowdown looms as inflation soars

// Like-for-like sales rise 1.6% after months of decline, but growth was driven by inflation as product prices were significantly higher than the same period last year
// BRC’s chief executive warned of a slowdown in consumer spending as shoppers will have to “prioritize the essentials”.

Summer is set to be the ‘calm before the storm’ as consumers spend more on heatwave essentials such as summer clothes and picnics at checkouts, while inflation masks a drop in volume Sales.

UK retail sales rose 1.6% on a like-for-like basis from July 2021 after four months of decline, according to the British Retail Consortium (BRC) and KPMG sales monitor.

However, the figures are not adjusted for inflation and the consortium said they represent a decline in terms of volume.

Inflation hit a 40-year high of 9.4% in June, and July numbers will be released later this month.


Helen Dickinson, chief executive of the British Retail Consortium, said: “However, with inflation at over 9%, many retailers are still facing falling sales volumes in what remains an incredibly difficult trading period.” .

“Consumer confidence remains low, and rising interest rates coupled with talk of recession will do little to improve the situation,” she added.

With the Bank of England expects inflation above 13% in October, when energy bills rose again, triggering a recession, Dickinson warned of a slowdown in consumer spending as shoppers will have to “prioritize the essentials.”

Paul Martin, head of UK retail at KPMG, said: “Summer could be the calm before the storm with conditions set to get tougher as consumers return from summer holidays for the holiday credit card bills, a further rise in energy prices and an increase in interest rates.

“With stronger headwinds on the cost of living on the horizon, consumers will need to prioritize the essentials, and discretionary product spending will be under pressure.”

Click here to sign up for the free daily Retail Gazette newsletter


Comments are closed.