Retail sales shine in June heatwave but food prices weigh on consumers
- High street enjoys 3.1% jump after sales came under pressure in May
Retail sales rebounded in June as warmer weather boosted demand for fans and summer clothing, according to industry data showed on Tuesday.
The closely-watched British Retail Consortium figures show improved consumer strength after a May slump, though high food inflation continues to weigh on shoppers.
Total retail sales increased by 3.1 per cent year-on-year in June, against a decline of 0.2 per cent in June 2024.
‘The soaring temperatures increased sales of electric fans while sports and leisure equipment was boosted by both the weather and the start of Wimbledon,’ said BRC chief executive Helen Dickinson.
Food sales increased 4.1 per cent year-on-year, although this was mainly driven by food inflation, with non-food sales rising just 2.2 per cent.
The latest figures from the Office for National Statistics showed grocery inflation increased from 3.4 per cent in the year to April to 4.4 per cent in May.
Retailers will be hoping the BRC’s latest figures are just the start of an uptick in sales over the summer after May’s official data showed the biggest monthly drop in sales volumes since December 2023.
Heatwave: Warmer weather and sporting events boosted retail sales last month
‘Warm weather and the start of the holiday season led to modest monthly growth for clothing sales,’ said Linda Ellett, KMPG’s head of consumer, retail and leisure.
‘But retailers will be hoping that the buying is not yet complete and that the pace picks up further in July and August as suitcases get packed and the sun hopefully keeps shining.’
The BRC said that the outlook for retailers is ‘not all bright and sunny’ with many watching for details of the upcoming business rates reform.
‘If the Government includes shops within its new higher rates threshold, then many retailers will be forced to rethink their investment plans,’ says Dickinson. ‘The closure of larger stores would harm the local communities they support, costing jobs and reducing footfall in the area they serve.’
Separate figures from Barclays published today showed that overall consumer spending fell by 0.1 per cent year-on-year in June compared with a 1 per cent rise in May.
The bank’s figures showed spending was more muted than the BRC’s numbers, but confidence in household finances improved to a four-moth high of 73 per cent.
Jack Meaning, Chief UK Economist at Barclays, said: ‘The economy has cooled throughout through Q2, but our data does show pockets of strength. However, with both global and domestic uncertainty, and temporarily heightened inflation likely to continue, consumers are remaining cautious and maintaining savings buffers.
‘We expect this to lead to limited GDP growth for the remainder of this year, before falling interest rates and a stronger sense of certainty drive a return to growth next year.’
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