The UK’s retail sales benefitted from their best July in seven years, new figures show, adding to hopes that the economy is heading into a sustainable recovery.
According to the British Retail Consortium/KPMG Retail Sales Monitor for July 2013, retail sales values were up 2.2 per cent on a like-for-like basis when compared with the previous year. On a total basis, they were up 3.9 per cent, which is the fastest July growth since 2006.
The rise was attributed to the month’s heatwave, which led to increased demand for products such as sun cream, beer, barbecue foods and swimwear. However, July was also the third month running that retail sales have improved in the UK.
BRC director-general Helen Dickinson says: “This is a very solid sales performance, the second best month this year and better than we’ve seen in any July since 2006. It has been driven by the warm weather and retailers working hard to offer deep discounts and great offers to their customers, with the reduction in shop prices we reported for July translating into more generous spending in UK stores.
“Food has performed very strongly, with summer barbecue ingredients and feel-good foods doing well during a month where the Lions, Murray, Chris Froome in the Tour de France and the start of the Ashes series all contributed to the positive summer feeling.”
IHS Global Insight chief UK and European economist Howard Archer notes that the retail numbers are the latest piece of economic data to suggest recovery in the UK. Recent business surveys showed improving activity across the services, manufacturing and construction sectors during July.
This suggests the UK economy will be able to surpass the 0.6 per cent GDP growth recorded in the second quarter of the year, he adds, although a consumer-led recovery is by no means guaranteed.
Despite the robust BRC survey and other recent largely good news on the consumer front, there are still significant uncertainties about the prospects for consumer spending going forward,” Archer says.
“Consumers’ purchasing power is currently constrained by consumer price inflation running well above earnings growth. Tighter fiscal policy is also affecting many families, while debt levels are still high despite significant progress having been made in deleveraging.”