Heatwave drives retail sales but autumn slowdown anticipated as inflation masks falling volumes
The summer is set to be “the lull before the storm,” with consumers splashing out on heatwave essentials at the tills while inflation masks a drop in volume sales.
UK retail sales increased 1.6 per cent on a like-for-like basis from July 2021, according to the British Retail Consortium (BRC) and KPMG sales monitor.
However, a small rise in sales masked a much bigger drop in volumes if historically high levels of inflation are accounted for, the monitor stressed.
Over the three months to July, food sales increased 2.3 per cent on a total basis while sales of non-food items dropped by two per cent over the same period.
Summer essentials boosted sales, with clothes, picnic food and fans seeing uplifts.
“However, with inflation at over nine per cent many retailers are still contending with falling sales volumes during what remains an incredibly difficult trading period,” Helen Dickinson OBE, chief executive of the British Retail Consortium, said.
With the Bank of England anticipating inflation to surpass 13 per cent in October when energy bills rise again, Dickinson warned of a consumer spending slowdown as shoppers will have to “prioritise essentials.”
“The summer could be the lull before the storm with conditions set to get tougher,” with credit bills and household bills stacking up for households, added Paul Martin, KPMG’s head of UK retail.