Weakest July sales growth since records began as UK retailers struggle

High Street

Consumer spending in the UK has fallen to a new low amid continuing political and economic uncertainty.

Annual sales growth rose to 0.3% in July after contracting by 1.3% in June and 2.7% in May, according to the British Retail Consortium.

But it was still the lowest July figure since records began in 1995.

July saw record temperatures and, considering these came after a June that was dreary weather-wise, retailers could normally have expected high demand for items such as summer clothing.

But Helen Dickinson, chief executive of the BRC said: “While retailers will welcome the return to growth, it has nonetheless been a punishing few months for the industry.

“The combination of slow real wage growth and Brexit uncertainty has left consumer spending languishing with the 12-month average total sales falling to a new low of just 0.5%.

“Whereas last year’s glorious sunshine and World Cup Finals led to strong consumer demand over the summer, this year has been weak in comparison, with both June and July showing the lowest sales on record for their respective months.”

Ms Dickinson called for a “coherent strategy for retail”, adding: “The challenging retail environment is taking its toll on many high street brands who must contend with rising import costs, a multitude of public policy costs, and ever higher business rates.

The government should freeze future business rates rises and fix the appeals system before embarking on a wholesale reform of this broken tax system.”

On a like-for-like basis, UK retail sales edged up by 0.1% from July 2018, but Paul Martin, UK head of retail at survey sponsor KPMG, described shoppers as “notably disengaged overall”.

Meanwhile, Barclaycard reported similar consumer caution in its monthly consumer spending data, which showed 1.7% growth, the best figure since April but still relatively downcast.

Spending on cinema tickets was the one positive note – up 15% on a year earlier, thanks to blockbusters such as The Lion King and Toy Story 4.

Barclaycard director Esme Harwood said: “Underlying uncertainty about the wider economic and political landscape (is) causing many to hold off making purchases on bigger-ticket items.”

Just 54% of consumers said they felt comfortable making big purchases, down from 60% the previous month, according to the survey.

Job loss fears rose to the highest in more than two years.

It comes a day after new car sales suffered their biggest July fall in seven years and Tesco announced it was cutting 4,500 jobs