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Retail gross sales drop in July as rain dampens demand

Retail gross sales volumes fell by 1.2% in July after the moist climate hit summer season clothes gross sales and the price of residing weighed on meals customers.

The Workplace for Nationwide Statistics (ONS) stated it was a very dangerous month for supermarkets.

“The summer season washout mixed with the elevated price of residing meant sluggish gross sales for each clothes and meals,” it stated.

Shops additionally reported falling demand for family items.

Illustrating how a lot costs have risen, the ONS stated that in comparison with February 2020 – the final full month earlier than Covid struck – complete retail gross sales have been 16.4% larger by worth however 1.8% decrease within the quantity of products folks purchased.

Earlier this week, new figures confirmed that inflation, which measures the speed at which costs are rising, slowed once more to six.8%. Nevertheless, meals costs are nonetheless growing at a excessive charge.

The ONS stated gross sales volumes at supermarkets fell by 2.6% July after an increase in June.

It stated “among the fall was due to the poor climate decreasing summer season clothes gross sales. Nevertheless, meals gross sales in supermarkets additionally fell again”.

Retail gross sales between June and July fell by greater than anticipated. Economists had forecast a drop of round 0.6%.

Ruth Gregory, deputy chief UK economist at Capital Economics, stated she was cautious about studying an excessive amount of into the retail gross sales figures because it “had rather a lot to do with final month being the sixth wettest July since information started in 1836”.

“However with the Financial institution of England’s rate of interest hikes nonetheless feeding by and client confidence falling, we stay downbeat on the outlook for general spending this yr,” she stated.

Shops stated gross sales volumes fell by 2.9% between June and July. In addition to clothes, they reported a fall in demand for furnishings and lighting.

For some retailers, the poor climate meant clients modified what they purchased.

Gary Grant, founder and chairman of The Entertainer toy retailer, advised the BBC’s Right now programme that oldsters had spent extra on gadgets to maintain youngsters occupied throughout the rain.

He stated that whereas its outside toy gross sales have been “considerably down” on a yr in the past, “our indoor gross sales, whether or not that be our stationery gadgets, our craft gadgets, our puzzles, our video games, issues that you’d have to hold your youngsters occupied in the home, these gross sales have elevated”.

The rain additionally helped on-line retailers as customers stayed at dwelling, with gross sales up by 2.8% in July.

In complete, the share of retail gross sales on-line final month rose to 27.4% – the very best since final February – in comparison with 26% in June.

In the meantime, the ONS revised down the expansion in retail gross sales for June from an increase of 0.7% to a rise of 0.6%.

Silvia Rindone, managing accomplice of technique and transactions on the accountancy agency EY, stated that gross sales might bounce again in August as youngsters put together to return to high school.

“Retailers ought to see gross sales enhance in August as households begin purchasing for the beginning of the brand new college yr in September. ‘Again to high school’ is usually the very best spending season in retail after Christmas,” she stated.

Waiting for the festive interval, Mr Grant stated folks tended to hold-off making large ticket purchases till the ultimate few months of the yr.

Whereas The Entertainer is gaining from the recognition of the Barbie movie for the time being, specifically gross sales of dolls and clothes, gadgets akin to Barbie’s caravan or her home, which may price as a lot as £300, will probably be “the massive Christmas current”, he stated.