Speaking in the wake of the publication of the June UK retail results, Helen Dickinson, chief executive of the British Retail Consortium explained retail sales growth ticked up slightly in June with hot weather prompting purchases of summer essentials like swimwear.
In the five weeks to 1 July, UK total retail sales increased by 4.9% in June, against a decline of 1.0% in June 2022. This is above the 3-month average growth of 4.6% and the 12-month average growth of 4.0%.
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“Consumer confidence remains fragile. But, with headline food inflation easing for two months in a row as prices of essentials start to fall thanks to stiff competition and consumers continuing to shift shopping patterns to mitigate as much inflation as they can, confidence could improve. However, retailers’ efforts to bring down prices could be derailed by costly reforms to the packaging levy (Extended Producer Responsibility) and a new deposit return scheme putting an inflationary £4bn ($5.17bn) burden on retailers,” Dickinson said.
“A hike to business rates is also on the cards for next April. Government must look at how these costly policies will impact inflation and consumers and think again,” Dickinson added.
June UK results overview
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By GlobalData- UK like-for-like retail sales increased by 4.2% in June, against a decline of 1.3% in June 2022. This was below the three-month average growth of 4.3% and above the 12-month average growth of 3.6%.
- Non-food sales increased 0.3% on a total basis and decreased 0.5% on a like-for-like basis over the three-months to June. This is below the 12-month total average growth of 0.8%. For the month of June, non-food was in growth year-on-year.
- Online non-food sales decreased by 1.0% in June, against a decline of 9.1% in June 2022. This is shallower than the three-month average decline of 2.4% and the 12-month decline of 3.2%.
Paul Martin, UK head of retail, KPMG, says: “The sun was shining on retailers in June, with the warm weather bringing consumers back out to the high street and like-for-like sales up nearly 5% on last year.
“Sales of suntan lotion, food and clothing were all given a boost as consumers made the most of the record June temperatures. Online sales continued to fall, but at a much lower rate, with household appliances and gardening equipment proving popular.
“Apart from a blip in May, retail sales growth has remained steady at around 5% every month in the first half of this year. However, the growth comes against a background of much higher inflation levels – resulting in reduced margins and profitability for operators across the sector.
“As we move into the last half of the year, retailers will be hoping that anticipated falls in inflation start to deliver stronger sales growth in order to improve the overall health of the sector. The wild card continues to be food inflation which remain stubborn, and is having a negative impact on consumers’ ability to spend on non-essential items.
“Consumers have so far remained resilient, but the triple threats of further interest rate hikes, resolute double digit food inflation and an economy recovering at a slower rate than predicted, could hamper a return to much needed profitable growth across the retail sector.”
