July’s retail sales figures offer a cautiously positive picture for British shops, though it’s far from plain sailing, according to Shore Capital’s Clive Black.
The latest British Retail Consortium and KPMG data showed a 2.5% rise in total sales year on year, comfortably ahead of the 12-month average of 1.9%.
But as Black notes, this growth “barely touches the sides” when you consider the rising costs retailers face, largely driven by government policies.
Food sales led the way, with a strong 3.9% increase, much of it inflation-fuelled rather than volume-driven, reflecting the ongoing pressures from labour, energy, and business costs.
Meanwhile, non-food sales also showed welcome growth (up 1.4% overall) with physical stores outperforming online, possibly thanks to better weather encouraging footfall. Categories like gaming and computing performed well, while homeware held steady.
Looking ahead, Black flags the looming back-to-school season and possible tax hikes in the autumn budget as potential hurdles.
“If economic growth stalls and taxes rise, the consumer could face more pressure, which would weigh on spending,” he warns.
With wage growth holding up but inflation still a drag, retailers face a tricky balancing act between maintaining margins and keeping customers spending.
The FTSE 350 Retail Index barely moved at 4,506.70.