UK retail sales rise to six-month high

UK retail sales rose to a six-month high in July as department stores enjoyed the strongest trading in 30 years, the CBI reported on Monday.

Clothing and footwear sales increased at the fastest pace, helped by the warm weather and promotions, a survey of 60 retailers by the business group found.

“The UK’s first heatwave in seven years boosted high street sales, as consumers stocked up on flip-flops and sunscreen. Even more reluctant shoppers were encouraged by sales and promotions,” said Richard Lowe, head of retail and wholesale at Barclays.

Of the retailers surveyed, 43 per cent said sales were higher in July compared with a year earlier, while 26% said they were lower. The resulting balance of +17 per cent was the highest since January, and the first rise in five months.

The balance of department stores reporting a rise in sales was +98 per cent, the highest since the survey began in 1983.

It fuelled expectations that the economy got off to a reasonable start in the third quarter, after official figures last week showed gross domestic product increased by 0.6% between April and June.

The good news was not widespread, however, and the CBI’s latest distributive trades survey showed sales of furniture and carpets and some food and drinks categories fell in July.

“The feel-good factor from the heatwave and early summer sales has helped boost high street sales after a very weak start to the year,” said Stephen Gifford, the CBI’s director of economics.

“A return to even modest spending is welcome news but the bottom line is that confidence will not bounce back fully until family finances improve significantly.”

Gifford played down suggestions that the birth of Prince George of Cambridge would have a positive impact on sales, but said continued warm weather and price discounting were likely to drive retail growth in August.

Of those retailers surveyed, 39% expected sales to rise next month compared with a year earlier, while 29% predicted a fall.