Retail sales were stronger than expected over the summer, as the warmer weather and women’s football helped to boost spending, official figures show.
Data from the Office for National Statistics shows retail sales volumes jumped by 0.6 per cent in July, ahead of forecasts of just 0.2 per cent.
However, the ONS said it had revised the previous months’ data to reveal a less volatile but ultimately slower growth rate.
The annual growth rate also came in below expectations at 1.1 per cent after the ONS revised its data to account for seasonal variations.
Its annual review found the ONS had not adjusted the figures correctly with June’s 0.9 per cent monthly growth rate revised down to 0.3 per cent.
Sales at non-store retailers, which mainly include online retailers, increased by 2.5 per cent in July to reach their highest level since February 2022, thanks to good weather and the Women’s Euros.
Summer splurge: Warmer weather boosted retail sales in July and August
Nicholas Found at Retail Economics, said: ‘Homewares and fashion continue to rely heavily on promotions rather than a meaningful recovery in demand. That said, we’re seeing selective spending in categories benefiting from innovation in technology and wellbeing.’
There was better news in August as high street sales reached their highest point in two years in August, according to separate figures from business advisory firm BDO.
Its sales tracker found that retail sales rose above inflation for the first time this year, buoyed by heavy discounting and promotions ahead of autumn.
Sales at high street stores increased by 5.2 per cent in August, their highest growth since August 2023, and after seven consecutive months of lower sales.
Online sales continued their strong performance throughout the year, jumping 6.6 per cent last month compared to August 2024.
Overall retail sales in-store and online increased by 3.9 per cent, against a decline of 0.7 per cent last year.
The figures will be welcomed by the sector, which has struggled with depressed sales and rising costs.
Sophie Michael, head of retail and wholesale at BDO said: ‘Given the disappointing performance of bricks-and-mortar stores this year, the strong growth of in-store sales during August is a very encouraging sign for retailers as we head into the crucial pre-Christmas trading period.
‘However, it is likely that some of this growth was driven by heavy discounting and promotions, as retailers focused on clearing their stock ahead of the autumn season.’
It means August’s sales figure could be an outlier, as high street stores battle higher cost bases, partly due to National Insurance contributions.
Bosses are also concerned about the impact of Labour’s plans to reform business rates, which could see thousands of larger shops end up paying more on the property tax.
‘Retailers will have to work very hard to maintain the level of growth we’ve seen this month, optimising their product and pricing, and making their stores places that customers enjoy spending time,’ said Ms Michael.
The figures come a week before the release of July’s GDP data, which economists expect to show a slowdown after unexpectedly strong growth in the first half of the year.
Martin Beck, chief economist at WPI Strategy, described the outlook for retailers as ‘mixed’, with certain headwinds making ‘a serious retail revival harder to envisage’.
He added: On the positive side, still-strong wage growth and Bank of England rate cuts are restoring some spending power to consumers.
‘Households also still have savings to tap, which could support discretionary purchases if confidence improves. But risks remain, from likely tax rises in the Budget to the continuation of what appears to be a post-Covid shift in spending from ‘stuff’ (durable goods) to ‘fun’ (consumer services).’
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