Rain washes away retail sales during wet July

Unusually wet weather impacted British retailers last month, pushing down sales by more than had been expected, the Office for National Statistics reported on Friday.

ONS figures suggested that retail sales volumes fell 1.2% during the month, and that people chose to shop online more.

Economists had expected a fall, but only by 0.5% according to an average of different estimates provided by Pantheon Macroeconomics.

The ONS also said that June had been worse than first thought. Last month it said that June retail volumes rose 0.7%, on Friday it revised this figure down to 0.6%.

Despite a heatwave in Europe which was linked to climate change, the UK had its wettest July since 2009, and the sixth wettest July on record since 1836.

The wet weather and online promotions meant the proportion of sales made via the internet grew from 26% in June to 27.4% in July, the highest level since February 2022.

There was a 2.6% fall in retail sales volumes at food shops.

Part of this was because of a drop in food sales, but much of it was due to a fall in clothes sales at supermarkets due to the bad weather.

ONS deputy director for surveys and economic indicators Heather Bovill said: “Retail sales fell sharply in July as poor weather impacted most sectors.

“It was a particularly bad month for supermarkets as the summer washout combined with the increased cost of living meant sluggish sales for both clothing and food.

“Department store and household goods sales also dropped significantly.

While (we don't) think July’s particular weakness is wholly indicative of the outlook for retail, given the weather factor, subdued growth is likely to characterise the sector for the foreseeable future.

“The wet weather did mean a good month for online retailing, as discounting plus consumers shopping from the comfort of their homes boosted sales.”

The amount that shoppers spent also fell, but at the slightly slower rate of 1%.

This continued to add to the trend that people are spending more to get less that has been seen in the official statistics over recent years.

Due to high inflation levels, people are buying around 1.8% less in volume terms, but spending 16.4% more in value terms compared to February 2020, before the pandemic hit.

Martin Beck, chief economic advisor to the EY Item Club, said: “With sales in July well below the second quarter average, there appears to be a good chance that sales volumes could fall in the current quarter.

“But while the EY Item Club doesn’t think July’s particular weakness is wholly indicative of the outlook for retail, given the weather factor, subdued growth is likely to characterise the sector for the foreseeable future.

“On the one hand, falling inflation and still-strong growth in cash pay mean average wages have finally started to rise again in real terms.

He added: “Meanwhile, the financial position of households, in aggregate, is relatively healthy, reflecting unplanned savings accumulated during the pandemic and a paying down of unsecured debt in recent years.

“But the impact of higher interest rates continues to build.

“An increasing number of households are reaching the end of fixed-rate deals and those re-mortgaging typically face a rise in monthly mortgage payments of several hundred pounds.

“And evidence of a cooling in the jobs market from rising unemployment and falling job vacancies mean that what has been a buttress to consumer spending is now looking less solid.”