Arrival of summer prompts pick-up in UK retail sales growth

UK retail sales rose by 1.2 % in June on a like-for-like basis from June 2016, according to statistics from the British Retail Consortium (BRC) and accounting firm KPMG.

The BRC-KPMG retail sales monitor for June (which covers the five weeks from May 28 to July 1), notes that over the three-months to June, non-food retail sales increased 0.9 % on a like-for-like basis and increased 1.2% % on a total basis – above the 12-month total average growth of 0.6 %.

This lift represents is the best 3-month average since December, and the first above 1% of the year so far.

Online sales of non-food products grew 10.1 % in June, compared with 9% a year earlier.

BRC chief executive Helen Dickinson OBE commented: “The arrival of summer provided a welcome pick-up to sales growth in June, particularly to non-food categories which saw a reversal in fortunes after a prolonged period of sluggish growth.

“Leisure pursuits and activities spurred consumer spending on summer clothing, beauty products and outdoor toys, which were also boosted by gift purchases over Eid [the religious holiday on June 25-26 celebrated by Muslims].

“The six-month average, buoyed by June’s strong performance, now paints a slightly rosier picture for retail sales.

“But on closer inspection, the year-on-year numbers belie the fact that rising food prices are responsible for the main component of growth, and have prompted more cautious spending towards discretionary non-food items.

“Online continues to take the lion’s share of growth, although contribution from stores increased slightly in June as it seems shoppers headed out with specific purchases in mind, rather than just to browse.

“Looking ahead, there’s a question mark over whether this spending momentum will last, as household expenditure is increasingly squeezed from rising inflation and slowing wage growth.

“The reality is that retailers’ efforts in absorbing mounting cost pressures into their margins are already being tested. So the Government must have the consumer front of mind as it enters the UK’s trading negotiations with the EU, to avoid any further cost increases to retailers and their customers.”

KPMG UK head of retail Paul Martin added: “After a challenging month in May, retail performance in June appears to have rebounded both online and on the high street.

“However, while the latest figures are definitely more favourable than last month’s, retailers must look at the bigger picture.

“Inflation and household debt are fuelling part of this retail growth; meanwhile the industry is undergoing significant structural changes more broadly. The retailers succeeding are those embracing change.”

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