UK retail sales boosted by Euro 2024 and summer discounts

Retail sales in Britain rebounded in July, helped by summer discounts and the boost to consumer appetite from Euro 2024.

Sales volumes rose 0.5 percent last month, according to the latest figures from the Office for National Statistics (ONS), slightly below analysts’ forecasts for a 0.7 percent rise.

However, this represented an improvement from the 0.9 percent drop recorded in June, when the country was hit by bad weather and the uncertainty of the general election.

The recovery was led by department stores and sporting goods shops, which benefited from summer discounts and popular sporting competitions such as the European Championship.

Sales volumes for the former increased by 4 percent month-on-month and grew by 10.6 percent online.

However, motor fuel sales fell 1.9 percent despite average petrol and diesel prices falling slightly to 144.4 pence per litre and 150.4 pence per litre respectively.

Purchases at home goods and textiles, clothing and footwear stores fell by 0.6 percent, while sales at food stores remained stable.

Danni Hewson, head of financial research at AJ Bell, said: “Sporting optimism did not entirely erase cash concerns and consumers were still looking for deals before opening their wallets.”

He added: “Things still cost more than they did a couple of years ago, and although inflation remained at ‘normal’ levels in July, people’s disposable income is not enough to cover as much as it used to.”

The ONS revealed on Wednesday that the UK inflation rate rose to 2.2 percent in the year to July, partly because gas and electricity prices fell less than a year earlier.

However, inflation has plummeted over the past two years, reaching 11 percent in October 2022 following a surge in energy prices caused by the Ukraine war and the easing of Covid-related restrictions.

The Bank of England also cut interest rates by between 0.25 percent and 5 percent earlier this month, leaving retailers hopeful that this will spur a recovery in consumer spending.

Charlie Huggins, equity director at Wealth Club, said: ‘Labour’s landslide election victory, the recent interest rate cut and falling mortgage costs have likely helped support UK consumer spending.

‘Overall, the UK economy appears to be making good progress, with few signs of consumers cutting back significantly on spending.

‘With inflation moderating, paving the way for further interest rate cuts, retailers can look ahead to the rest of the year with a degree of optimism.’