Retailers suffered a tough July as wet weather and interest rates hikes saw sales growth fall behind the rate of inflation, forcing high-street sellers to step up the number of promotions they offer, research from the British Retail Consortium (BRC) found.
Jumping by 1.5% year-on-year, retail sales were weaker than the 3.3% average bump experienced in the three months to July and the 12-month average of 3.9%.
Inflation stood at 7.9% in July, highlighting a drop in volumes, however on a like-for-like basis, sales increased by 1.8% last month, compared with a jump of 1.6% in the year before.
Paul Martin, UK head of retail at KPMG, said an increasing number of retailers were being forced to introduce price cuts and other promotions to get customers through the door and “battle to keep market share”.
“Price-conscious consumers are shopping more carefully, more aware of where bargains can be found and what they are getting for their money – which is biting hard into retail margins and profitability,” he said.
Food sales fared slightly better, lifting by 8.4% and by 8.7% on a like-for-like basis, although food inflation has been slightly higher in 2023, coming in at 13.4% in July, according to the BRC.
Sarah Bradbury, chief executive officer at the Institute of Grocery Distribution, said: “Food and drink sales continued to grow in July, although the rate of growth was the lowest since January.
“Sales growth was driven by inflation as volumes remained in negative territory, in part due to the unseasonably wet weather, especially compared to last July's heatwave.”