After temperatures hit record highs last month, summer sun warms retail sales

A sunshine-fueled rise in retail sales delivered a glimmer of economic cheer yesterday as UK consumers braved the cost of living crisis.

Official figures showed sales volumes rose 0.7 percent better than expected in June as temperatures hit record levels for the month.

Hot weather boosted sales of barbecue food and analysts said demand for outdoor furniture was likely to have increased.

It adds to hopes that were ignited this week when inflation fell more sharply than expected. That fueled optimism that the worst of Britain’s protracted cost-of-living contraction may be over and interest rates may not need to rise as much as feared. The 0.7 percent rise in retail sales was much better than the 0.2 percent improvement economists had expected.

And it follows an increase of just 0.1 percent in May, when the economy was hit by an extra Coronation bank holiday.

However, sales in June were 1 percent lower than the same month last year.

Office for National Statistics chief economist Grant Fitzner said: “Retail sales grew strongly, with food sales recovering from the effects of the additional bank holiday, partly helped by good weather, and department stores and furniture stores also having a strong month.”

‘However, these were partially offset by falls in fuel, garden centers and clothing stores. Growth continued to fall on an annual basis, but at its slowest pace since the start of the Ukraine war.’

Grocery store sales rose 0.7 percent in June, a rebound from a 0.4 percent drop in May.

But while sales at department stores rose, clothing and shoe stores saw their sales fall.

Stores that sell home goods enjoyed a 1.4 percent rise, helped by strong sales at furniture stores.

Despite the joy, there is still evidence that consumers are being squeezed. A separate survey by market research firm GfK yesterday showed a sharp drop in consumer confidence this month, the first in six months.

The report stated: “Reality has begun to bite as people continue to struggle to make ends meet.”

Jacqui Baker, director of retail sales at RSM UK Consultants, said: “With another rate hike in June from the Bank of England, rising mortgage and rental costs remain a dark cloud for consumers, leaving retail spending in a tight spot.”

‘The increase in sales will be a welcome boost for retailers.

“But unfortunately, last month’s positivity could be short-lived as bad weather, rail strikes and lower consumer confidence could dampen July results.” And Jonathan Moyes, head of investment research at Wealth Club, said: “While the picture may look rosy now, as the months turn colder, there is a risk that cooling from higher mortgage costs and inflation will weigh heavily on household budgets.”

‘The big question is: how much longer can the consumer hold out? Is this the last summer spending hurrah before the cost of living contraction really starts to hit, or is the consumer in a stronger financial position than many predict?’

He added: “For now, the UK consumer continues to defy fatality dealers.”