June retail sales back to their pre-Covid levels
The volume of retail sales increased 13.9% in June when compared with May, according to the Office for National Statistics (ONS).
It said non-food and fuel stores are continuing their recovery from the sharp falls seen since the start of the health crisis.
This is the second month in a row that retail sales have increased, taking them to similar levels before record declines were reported. In fact, they were down just 0.6% when compared with February.
However, the ONS said there is a “mixed picture in different store types” as while non-food stores and fuel sales showed strong monthly growth – 45.5% and 21.5% respectively – levels haven’t recovered from the sharp falls in March and April.
Food stores and non-store retailing both reached new highs, with volume food sales 5.3% higher, and non-store retailing 53.6% higher than February.
But value sales for textile, clothing and footwear were down 34.9% and department store sales were also down 5.2%.
A quarterly comparison also reveals that the volume of sales decreased by 9.5% when compared with the previous three months, with declines across all store types except food stores and non-store retailing.
Online spending reduced to 31.8% in June when compared with the record 33.3% reported in May, but is still a big increase from the 20% reported in February.
‘Figures overplay the speed of recovery’
Ruth Gregory, senior UK economist at Capital Economics, said while retail sales rose back to pre-pandemic levels in June, the sector has benefitted disproportionately from online spending and a switch away from other types of spending, which “overstates the extent of the recovery in the wider economy”.
She added: “It was the more discretionary areas of spending that did best in June, with non-food sales up by 45.5% month-on-month. Within that category, household goods and clothing sales enjoyed big rebounds, rising by 66.8% and 70.2% respectively.
“But these big moves mask the fact that physical retailers have continued to struggle. In June, non-food store sales were still 15% lower than in February. Clothing sales were 34% lower, even after accounting for the business they do online. This reflects the fact that they were only open for the second half of the month.
“The retail figures overplay the speed of recovery as they capture a substitution away from non-retail spending (i.e. restaurants to supermarkets, bricks & mortar to online). And the recovery in non-retail spending has been much more muted. What’s more, the real-time CHAPS payment data suggests that spending has tailed off in July. So despite today’s data release, we still expect the pace of the recovery over the next year or so to be disappointing.”