The latest figures show that UK retail sales will continue their downward trend. Rising food and fuel prices are weighing heavily on the economy, and this isn’t helping consumers spend more money on clothes and other items. While there is little doubt that the Jubilee will boost consumer spending, the overall trend still shows that retail sales will fall. Non-food stores are hit the hardest, with a 4.7% fall in June compared to the same period last year. However, the good news for food stores is that the decline in non-food sales only lasted one month, and during Jubilee celebrations, sales rose by 3.1%.
This latest trend suggests that household goods are getting shoved to the bottom of the priority list, and consumers are cutting back on spending on those items. Clothing and accessories sales are down 4.7% – and this is bad news for clothing and accessory retailers. The drop in consumer spending is particularly bad news for online fashion brands, as margins are being squeezed and consumers aren’t spending as much as they used to.
The latest figures show that UK retail sales fell by 0.1% in June – July 2022 compared to the previous month, despite the hefty drop in May. Although the figure is slightly below the consensus forecast, the underlying trend is still negative. As a result, retail sales will continue to slow and will remain far below their pre-Covid February 2020 levels. Despite the weak overall trend, the Jubilee doesn’t appear to have helped boost the economy.
Fuel prices are a big concern for retailers, with the cost of living weighing heavily on household spending. In October, high prices caused panic buying on fuel, and in June, petrol sales declined by 4.3%. The ONS said that consumers are feeling the pinch from the rising cost of living. Rising food prices also impacted the market. High prices are also hitting furniture and white goods. Thankfully, food sales remained stable, and despite the slump in these sectors, they will still be at a record high for the next 12 months.
The latest UK retail sales data have mixed effects on the pound. While fuel-exempt retail sales increased in June, they fell YoY. Consumer confidence remains at a historic low, with the Consumer Confidence Index at minus 41. Retail sales volumes were weighed down by the rise in food prices and the rising cost of living. These factors, coupled with high inflation, have led to a sharp drop in disposable incomes. Ultimately, a recession is inevitable.
Fuel prices have hit a new record high, with household budgets already taking a much greater bite of their spending power. While the pound is down over 2% this year, the cost of living is still rising and the official consumer prices index is at an all-time high of 9.1%. Fuel prices, including petrol, diesel, and electricity, are driving the rise in energy costs.