Retail sales fall in July

18-08-2006

Sales on the high street slowed unexpectedly in July, according to official figures from the Office of National Statistics (ONS).

The overall rate of growth slowed from a 2.1 per cent improvement in the three months to June over the three months to April to a 1.8 per cent growth rate in the equivalent quarters before July.

Meanwhile monthly growth stagnated, falling by 0.3 per cent following last month's equally unexpected 0.7 per cent sales bump.

Many had attributed the June improvement to the World Cup and the hot weather boosting food and drink sales, which remained up 0.4 per cent in July.

But it was falls in the non-food sector which hit overall sales this month, declining by 0.5 per cent altogether and dragging overall levels down into the negative.

Clothing stores were up 2.3 per cent but household goods fell by 3.4 per cent and non-store retailers lost 2.6 per cent of sales volume.

"The unexpected fall in July retail sales revives doubts about the strength of consumer spending, although it must be acknowledged that July's decline in sales follows robust gains in recent months and may have been adversely affected overall by July's hot weather," Howard Archer of research firm Global Insight commented.

"While record high employment will provide some support, we believe that consumer spending is likely to be relatively muted over the coming months as the recent interest rate hike adds to the significant headwinds already facing the consumer," he added.

Although today's figures represent an overall fall on June's high street performance, the ONS said today's figures remained "robust" when compared with the general rate of growth during the last three years.

This month's sales figures are four per cent higher than those recorded in July 2005, mainly thanks to a growth of 5.2 per cent by the food sector in the last 12 months.


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