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UK retail sales up 0.1%, slightly ahead of expectations

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07/08/2012
UK retailers face further strain as like-for-like retail sales values in July rose just 0.1% over the past 3 months, compared to 0.6% in the same period last year.

The British Retail Consortium’s data highlighted that sales on a total basis were up 2.0%, against a 2.5% rise in July 2011.

The BRC points to warm weather in the final week of July, combined with the start of the Olympics, as having helped support food and drink sales. But the sharp fall in food inflation has dampened top line growth.

The three-month rolling average showed the growth of like-for-like non-food sales outpacing food sales for the first time since May 2010, driven by strong growth in clothing and footwear and toiletries and cosmetics. Discretionary and big-ticket items continued to struggle with sales growth largely promotion-driven.

Online, mail-order and phone sales of non-food items showed stronger growth, up 15.6% against a rise of 9.6% last year. This marks the strongest growth this year.

Stephen Robertson, director general at the British Retail Consortium, said: “July was clearly not a golden month for retail. Like-for-like sales were virtually flat compared with a year ago and total growth of 2% was still behind inflation as consumers, dealing with squeezed budgets, prioritised their spending on essentials.

“The brightest spot was clothing and footwear thanks to cooler weather coinciding with autumn ranges reaching the shops. Consumers responded enthusiastically to the chance to refresh their wardrobes with items they could make use of straightaway.

“Some retailers also benefitted from the longer Sunday opening hours brought in for the Olympic period.

Helen Dickinson, head of retail, KPMG, said: “Sadly July was a lacklustre month and it’s doubtful this trend will change as early expectations that the Olympics will raise retailers’ fortunes look to be wide of the mark.

“Central London’s retailers are already being hit hard by shoppers actively avoiding the capital. It’s likely that any blip of benefit the games bring will be short lived.

KPMG expect further weakness in the retail sector for the coming few months as household disposable income remains squeezed, despite the fall in headline inflation.

Robertson added: “With only the opening couple of days of the Olympic Games covered by these statistics we’ll have to wait a while to assess the overall impact on retail sales. Let’s hope Team GB keeps on increasing its medal tally, bringing a feel-good factor that helps consumer confidence.”

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