UK retail sales fall less than expected as food spending jumps

Bloomberg

UK retail sales fared better than expected in June as a jump in bank holiday food sales helped mask the impact of the wider cost of living squeeze.
The volume of goods sold in stores and online fell 0.1%, following a 0.8% drop in May that was bigger than previously reported, the Office for National Statistics (ONS) said. Economists had expected a decline of 0.2%.
June saw a 3.1% jump in food sales linked to the Jubilee bank holiday, mitigating the impact of a 4.3% fall in fuel sales as drivers cut back amid record prices. Clothing and household goods purchases also fell. Sales excluding auto fuel rose 0.4% in the month, the ONS said.
“Fuel sales fell back considerably with retailers reporting the record high prices at the pump hitting sales,” said Heather Bovill, ONS deputy director for surveys and economic indicators.
“Clothing purchases dipped along with household goods, with retailers suggesting consumers cutting back on spending due to higher prices and concerns around affordability.”
The ONS also cautioned that the general trend for sales remains in decline. The monthly measure has proved a volatile data point in the aftermath
of the pandemic, swinging
between big falls and smaller recoveries.
Still, in a sign of a slow return to normality, the share of retail spending online has now dropped back to the lowest level since the start of the pandemic in March 2020. The proportion now stands at 25.3% compared, with the February 2021 peak of 37.4%. That’s still above the 19.7% level in February 2020 before Covid hit.
A separate report from GfK showed the broader impact of soaring inflation. Consumer confidence held at a record low this month as soaring food and fuel prices left consumers feeling “severely depressed,” the firm said.
The worst cost of living crisis in a generation, with inflation at a 40-year high and on track to hit double figures in months, is setting the back drop to the contest to succeed Boris Johnson as leader of the ruling Conservative Party.
The battle pits Foreign Secretary Liz Truss, who has promised tens of billions of pounds of tax cuts if she wins, against former Chancellor of the Exchequer Rishi Sunak, a continuity candidate staking his hopes on a reputation for prudence.
“Discretionary spending and particularly bigger purchases were put off as consumers become increasingly concerned about the future,” said Helen Dickinson, chief executive of the British Retail Consortium.