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July brings “lacklustre” month for retail Tuesday, 7th August 2012
UK retail sales values rose just 0.1 per cent on a like-for-like basis in July, although stronger food and clothing sales at the end of the month suggested a light at the end of the tunnel.
The latest figures from the BRC- KPMG Retail Sales Monitor for July found that on a total basis, sales rose 2.0 per cent against a 2.5 per cent rise in July the year before. Warm weather in the final week of the month, which coincided with the beginning of the Olympics, helped support food and drink sales, as the nation began to see a feel-good factor from the Opening Ceremony.
“July was clearly not a golden month for retail. Like-for-like sales were virtually flat compared with a year ago and total growth of two per cent was still behind inflation as consumers, dealing with squeezed budgets, prioritised their spending on essentials.” BRC director general Stephen Robertson said.
Across a three month weighted average, like-for-like food sales rose 0.9 per cent, with non-food up 1.0 per cent, the first time non-food had outpaced food sales since May 2010, thanks to strong growth in clothing and footwear and toiletries and cosmetics. Online sales of non-food items continued to improve, up 15.6 per cent against last July’s 9.6 per cent rise, making it the largest monthly improvement so far this year.
Speaking in light of the results, Matthew McEachran, analyst at Singer Capital Markets suggested the underlying analysis isn’t as bad as suggested, taking into account the wet weather and “disruption in the run-up to the Olympics”;
“The key take-away is that lower food price inflation and lower absolute petrol prices have resulted in the 3-month rolling average for Non-Food exceeding Food for the first time in two years. With Clothing prices set to flatten, or even fall, later in the season this marks the first real evidence that the erosion of spending power is moderating.”
Despite the ‘wash-out’ figures, Robertson added: “With only the opening couple of days of the Olympic Games covered by these statistics we’ll have to wait a while to assess the overall impact on retail sales. Let’s hope Team GB keeps on increasing its medal tally, bringing a feel-good factor that helps consumer confidence.”