Retail sales in food stores have seen a significant decline, raising concerns about consumer spending habits in a challenging economic climate.
- Sales volumes for food stores dropped by 2.6% in July, following a slight increase in June.
- The decline has been attributed to ongoing cost-of-living pressures and unfavourable weather conditions.
- Online shopping reached its highest level since February 2022, accounting for 27.4% of retail sales.
- Economists express concerns over the outlook of consumer spending due to various economic challenges.
Retail sales volumes for food stores fell by 2.6% in July, a reversal from the 1.1% increase observed in June. This decline reflects significant cost-of-living pressures impacting household budgets.
According to the Office of National Statistics (ONS), the overall retail sales volumes decreased by 1.2% last month, underscoring the broader economic challenges faced by consumers.
Supermarkets noted a reduction in sales, partly due to unfavourable weather conditions which affected sales of summer clothing and prompted consumers to shift towards online shopping. With online sales accounting for 27.4% of all retail sales in July 2023—up from 26% in June—this marks the highest proportion of digital sales since February 2022.
The cost of living, exacerbated by rising food and non-alcoholic beverage prices, is a crucial factor. The ONS reported an increase of 14.9% in these prices over the 12 months leading to July 2023.
Despite a slight rise in sales of automotive fuel stores by 0.7% in July, the overall economic sentiment remains cautious. Sales volumes for food stores are still 5.1% below their pre-pandemic levels in February 2020.
Ruth Gregory, deputy chief UK economist at Capital Economics, pointed out the unique conditions influencing the sales figures, stating, “last month [was] the sixth wettest July since records began in 1836.” She added that the outlook for consumer spending remains bleak due to ongoing interest rate hikes and declining consumer confidence.
These developments occur as the Bank of England’s chief economist warns that food prices may remain elevated due to geopolitical tensions, specifically the ongoing conflict in Ukraine.
The current economic climate indicates a challenging outlook for retail sales, particularly in the food sector, amid rising inflation and global uncertainties.
