Retail sales growth in July gave a modest lift to the UK economy, helped by warm weather and major sporting events. Sales rose by 2.5% compared to the same month last year. Warm temperatures encouraged shoppers to buy summer clothes and appliances.
Sporting excitement, including football and rugby, pushed food sales higher as fans stocked up during big matches. The data showed a rebound from June, when sales had grown just 0.5% year on year.
Homeware and indoor furniture also performed well, bouncing back from weak demand in 2024. This month’s growth was Britain’s fifth-warmest July on record, adding momentum to spending.
Concert ticket sales rose sharply, boosted by new tour announcements. These helped push discretionary spending up 2.4%. However, essential spending fell by 0.7%, showing that many households remain cautious about necessities.
Toy sales brought surprising support to the sector, jumping by 8% after last year’s 4% drop. At the same time, consumer card spending increased by 1.4% in July, compared to a small decline in June. Confidence in personal finances remained steady, with 75% of people saying they could manage their budgets.
Yet belief in the overall UK economy dropped three points to 22%, the lowest level since January. Despite wage growth outpacing inflation, households continue saving due to fears of layoffs and economic slowdown. Retailers warned that current growth is not enough to offset rising business costs.
Wage increases from the new minimum wage and high inflation still weigh heavily on the sector. The retail sales growth in July was higher than the 12-month average of 1.9%, but not enough to ease pressure.
Leaders in the industry cautioned that upcoming tax hikes could lead to store closures and job losses. Some said that further burdens in the autumn budget may force tough decisions for many retailers.
Analysts noted that shoppers are using artificial intelligence tools more often to manage their personal budgets. One in three adults already use AI to plan, budget, or track spending, especially among younger generations. Even so, experts said that higher employment costs and lingering inflation keep the trading environment very difficult.
In conclusion, the retail sales growth in July provided temporary relief, but major challenges remain ahead for retailers and households.
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