Surprise rise in UK shop sales

UK retail sales staged a surprise revival last month, official figures showed today.

Sales volumes in July were 0.8% higher than the previous month, the UK's Office for National Statistics (ONS) said. The fall was in stark contrast to a 0.2% fall expected by the City, and the record 3.9% fall reported in June.

The biggest contribution to July’s rise was a 2.8% rise for “other stores”, which includes sales of computer games and mobile phones. Clothing and shoe shops also saw a 1.5% improvement compared to previous month.

Food sales were 0.3% ahead in July compared to June. The ONS said there was evidence of growth in the discount food sector - which includes chains such as Aldi and Lidl. This is consistent with recent supermarket industry data which showed the discount sector enjoying its highest market share on record.

Household good shops – which includes furniture and electricals – also rose 1.6%.

Sales for non-store retailing and repair, including internet and mail order, were 0.1% down. The only other sector showing a decrease was non-specialised stores – mainly department stores – which saw sales volumes fall 2.6% last month.

Compared to July last year, retail sales volumes were 2.1% ahead, the ONS said. The average weekly value of sales in July was £5.2 billion, 3.8% higher than last year.

The rise also contrasts with data from the British Retail Consortium for July, which showed a 0.9% drop on a like-for-like basis compared with a year ago.

The ONS’s 3.9% sales fall reported for June, which was the biggest drop since records began in January 1986, has actually been revised downward further to a 4.3% dive, the organisation said.

The slump was consistent with a widespread consumer slowdown as households wrestle with soaring food and energy prices.

July’s unexpected rise will add to the uncertainty regarding the Bank of England’s next interest rate movement.

Rate-setters are battling with runaway inflation, which reached 4.4% in July, as well as a slowing economy.

For the three months ending July, ONS data showed retail sales volumes were 0.8% better compared to the previous three months. The main driver was from clothing and footwear shops, which saw sales rise 3.1%.

July’s price deflator, which measures whether prices are moving up or down, was 1.6% higher than a year ago. This was last as high in July 1998.

The main driver was food inflation, which was 6.1% in July, the highest reading since March 1992.