Retail sales fall as cold weather and general election hit spending

Retail sales in Britain contracted last month as the country was hit by bad weather and general election uncertainty.

The latest figures from the Office for National Statistics show sales volumes fell by 1.2 per cent in June, three times the 0.4 per cent drop expected by analysts.

By comparison, retail purchases rose 2.9 percent in the previous month, when the UK enjoyed its warmest May on record, with promotional activity driving a big surge in trade.

While June was drier than average, the first two weeks were cooler than usual due to northerly winds bringing Arctic air across the country.

Of the eight retail industries tracked by the ONS, only motor fuel recorded an increase in sales last month, growing by 2.1 per cent.

By comparison, sales at department stores fell 3.4 percent overall and 9.4 percent online, while clothing, footwear and furniture stores also suffered from subdued demand.

Meanwhile, sales at grocery stores fell by 1.1 percent, which the ONS largely blamed on supermarkets as well as “poor weather and economic conditions” that made Britons cautious about their spending.

Matt Jeffers, head of retail strategy and consultancy at Accenture UK and Ireland, said retailers will be “deeply disappointed” by the figures “as many had hoped the range of cultural and sporting events taking place during the month would provide a welcome boost”.

High-profile events included the Glastonbury Festival, the European Football Championship and the UK leg of Taylor Swift’s Eras tour.

Barclays has estimated that the 15-date Eras tour in June and August will boost the UK economy by almost £1bn this year thanks to enthusiastic fans spending huge sums on tickets, travel, hotels and clothing.

However, some analysts have blamed the “Taylor Swift effect”, which contributed to rising hotel prices, for keeping the UK’s inflation rate at its 2 per cent target for a second consecutive month.

This has reduced the likelihood of the Bank of England cutting interest rates in August, providing a much-needed boost to borrowers and encouraging consumers to spend more money in the shops.

Financial markets now put the probability of a rate cut at the BoE’s next meeting on August 1 at 35 percent, rather than the 50 percent previously forecast.

Susannah Streeter, director of money and markets at Hargreaves Lansdown, said: “With high interest rates looking set to continue through the summer, splashing out on a new sofa or dining table is not high on the agenda right now.”