UK retail sales weakened for the second month running in July as the supermarket price war and continued low food inflation saw shoppers spending less on food.
Like-for-like sales – which exclude spending in shops that opened or closed in the intervening year – were down 0.3 per cent in July on the same month last year, according to monthly data from the British Retail Consortium/KPMG survey.
City economists had been expecting sales to bounce back 0.55 per cent after a 0.8 per cent decline in June.
The fall was driven by continuing weakness in food sales, which declined 3.5 per cent in the three months to July. However, non-food sales continued to grow, up 2.4 per cent in the same period.
Perhaps driven by the pick-up in the housing market – June saw mortgage approvals rising for the first time since January – furniture was the best-performing category, with the highest growth since January, excluding Easter distortions.
Total sales were up 1.3 per cent year on year, showing consumers are continuing to spend, albeit at a slower pace than the 12-month average growth rate of 2.3 per cent.
This chimes with the recent CBI retail survey o n sales volumes, which rebounded strongly in July.
David McCorquodale, head of retail at KPMG, said the figures showed “the tale of two sectors continues, with polarisation between food and non-food”.
He added: “The grocers’ figures continue to make for gloomy reading for the sector. The impact of their prolonged discounting campaigns may be good news for consumers, but must be being felt deeply by the retailers, given like-for-like sales have fallen in value every month for the last 12 months, save for April when Easter helped sales.”
Helen Dickinson, director-general of the BRC, added that July last year “was a tough month to beat” considering it contained the combination of Andy Murray’s success at Wimbledon, the birth of a royal baby and exceptionally good weather.
Online sales saw stronger growth, with non-food sales up 14.9 per cent on a year ago. The BRC estimates that for non-food products, one in six pounds is now spent online.
Separate data from the vehicle auction company BCA showed a strong rise in the value of second-hand commercial vehicles, which it said was partly driven by the continued growth of online shopping and home delivery services creating another layer of demand for vehicles.
Date: August 12, 2014
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