British retail sales fell by 0.1% in June from May, according to official Office for National Statistics figures – a smaller drop than expected, but the broader picture is not cheering.
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Heather Bovill, ONS deputy director for surveys and economic indicators said, “After taking account of rising prices, retail sales fell slightly in June and although they remain above their pre-pandemic level, the broader trend is one of decline.”
Consumers ended up spending 1.3% more than they did in May due to rising prices, according to the ONS.
Inflation hit a 40-year-high of 9.4% in the 12 months to June, according to separate ONS statistics published this week.
The ONS also revised May’s figure sto show a 0.8% decline in spending – although retail sales are now 2.2% above figures from January 2020.
Food sales were up 3.1% due to the Queen’s Platinum Jubilee celebrations, while fuel sales slumped 4.3% as petrol prices hit record highs.
Data published this week by research company GfK in its long-running Consumer Confidence Index shows that consumer confidence sits at -41 in July, the lowest figure since records began in 1974.
In recent days, British companies pared back profits and earnings forecasts as consumers tightened their belts, with delivery unicorn Deliveroo (GB:ROO) cutting its revenue guidance.
As consumers shun big-ticket purchases, furniture retailer Made.com (GB:MADE) also slashed its earnings and sales forecasts for the coming months.
Joe Staton, Client Strategy Director, GfK says: “Consumer confidence remains severely depressed this month as the impact of soaring food and fuel prices and rising interest rates continues to darken the financial mood of the nation.
“Despite a two-point uptick in our hopes for our personal financial situation for the next 12 months, which might reflect optimism over imminent change at the top of the UK government, the overall index languishes at a historic low amid acute concerns for the general economic situation.
“Against this financial backdrop, the UK electorate is looking for a new leadership with a commitment to unleashing growth, tackling inflation and cutting taxation. The successful candidate will need to deliver a much-needed shot in the economic arm of the country if they are to help improve consumer confidence.”
