UK retail sales growth slowed to 1.3% year on year in July from 1.9% in June, even as Barclaycard's broader spending measure rose 2.0% and consumer confidence hit its highest level in 21 months. Food and pub spending got a lift from England's World Cup semi-final run, but shoppers stayed cautious on big-ticket purchases.
Retail momentum keeps slowing
The British Retail Consortium's total retail sales measure rose 1.3% year on year in July, a below-average pace that slowed from 1.9% growth in June. Like-for-like sales, which strip out the effect of new store openings, rose 1.0% year on year, down from 1.7% the previous month.
Food sales were a bright spot, up 3.8% year on year. Non-food sales fell 0.7%. Clothing sales benefited from the heatwave, though footwear sales declined, pointing to a consumer base still picking and choosing where to spend rather than lifting purchases broadly.
Barclaycard spending and confidence tick higher
Barclaycard's broader measure of UK consumer spending told a slightly more positive story, rising 2.0% year on year in July, marginally faster than June's 1.9% increase. Within that figure, essential spending ran at 2.9%. Non-essential spending rose a more modest 1.6%, reinforcing the theme of consumers prioritizing necessities over discretionary outlays.
Pubs stood out, with transactions up 10% as England's World Cup semi-final run drew people out to watch matches. Travel spending, meanwhile, skewed toward domestic staycations, with airline spending down 6% over the period. Despite the mixed spending picture, Barclays' measure of consumer confidence showed the most optimism about the UK economy in 21 months, suggesting sentiment may be improving even as spending growth on bigger-ticket items stays subdued.
Food supply chain pressure builds
Looking ahead, Sarah Bradbury, chief executive of the Institute of Grocery Distribution, struck a more cautious note on food prices specifically. She said pressures are building across the food supply chain because of the conflict in the Middle East and prolonged hot weather, increasing the likelihood of higher food costs and renewed pressure on household budgets as the UK moves into autumn. That warning adds a forward-looking inflation risk to what was otherwise a relatively encouraging month for UK food and hospitality spending.
Source: Investinglive
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