UK retail sales rose 0.5% in July, in line with economists’ forecasts, in a positive turn after June’s slow pace. The rise comes after a period of cold and wet weather that had already hampered economic expansion.
The Office for National Statistics reported that sales volumes in July were 1.4% higher than the same month last year, matching the average forecast of economists. However, compared to pre-pandemic levels in February 2020, sales volumes are still down by 0.8%.
The easing of inflationary pressures weighing on British consumers during 2022 and 2023 is now evident. Inflation rates returned to the Bank of England’s 2% target in May and June, with a slight increase seen in July. Notably, wage growth outpaced inflation by the largest margin since mid-2021 during the second quarter.
In a related move, the Bank of England cut interest rates earlier this month from a 16-year peak. At the same time, the longest-running measure of consumer confidence in Britain rose to its highest point in nearly three years last month, indicating that consumers feel their financial situation has improved and are more willing to make significant purchases.
Despite these positive indicators, the retail landscape presents a mixed picture. Clothing retailer Next beat expectations in its second quarter sales and updated its full-year profit forecast.
In contrast, luxury brands Burberry (LON:) issued a profit warning, and other UK retailers pointed to persistently low consumer confidence, particularly around more discretionary spending.
Reuters contributed to this article.
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