Dampened UK Retail Sales fall 1.2% in July 2023
Unfavourable weather conditions have put a damper on retail sales in the United Kingdom, leading to a noticeable change in how people shop. The rain has made shoppers cut back on their spending and turn to online shopping instead. New data from the Office for National Statistics (ONS) reveals that retail sales volumes in the UK went down by about 1.2% in July 2023. This decline followed a small increase of 0.6% in June 2023, showing how much the retail sector can be affected by outside factors.
The biggest impact of the persistent wet weather was felt in stores that sell food. These stores saw a significant drop of 2.6% in sales volumes in July 2023. Supermarkets pointed to the rain as the reason for fewer people buying clothes, and even food and drink sales went down. This change in shopping habits led more people to buy things online.
In response to this shift, online sales went up a lot. In July 2023, online sales made up a significant 27.4% of the total value of retail sales. This was higher than the 26.0% seen in June 2023 and was the most since February 2022 when it was 28.0%. The fact that online shopping increased so much, even when the weather was bad, shows how strong online shopping has become in today’s consumer world.
However, the effect of the bad weather on retail sales wasn’t limited to just stores selling food. Other types of stores that don’t sell food also saw a drop in sales volumes in July 2023, with a decline of 1.7%. This was different from the previous month when these stores had a small 0.6% increase in sales volumes. The stores said that the rain kept people away, which shows how closely outside conditions can affect what people buy.
While the retail sector faced difficulties, there were some areas that stayed strong. For example, stores that sell automotive fuel bounced back from a 0.6% decrease in June 2023 to a 0.7% increase in July 2023. This suggests that some parts of retail managed to handle the tough conditions better and adapt to how people were changing their preferences.
Comparing the sales data now to before the pandemic in February 2020 shows an interesting picture. Even though the total value of retail sales went up by 16.4%, the amount of things people bought was 1.8% less. These numbers show how much the costs of things have changed due to things like inflation, and how businesses and people are still trying to get back to how things were before COVID-19.
In conclusion, the recent drop in retail sales because of the bad weather is a reminder of how complex it is to understand why people shop the way they do. Businesses and people are still figuring things out in a changing economic world. The strength of online shopping and how some parts of retail can adjust are the main things to watch in this changing retail landscape.
Broader Economic Trends and Implications
The decline in the UK’s retail sector is happening alongside bigger trends in the economy. In the Eurozone, the headline inflation rate has gone down by half in the past nine months and was at 5.3% in July. The policymakers at the European Central Bank are hoping to see core inflation, which was at 5.5% in July, go down a lot. This could be a sign that interest rates might stop going up, which would be good for how much people spend.
In the United States, there were fewer people filing for unemployment benefits last week, down by 11,000. This, along with more people buying things in July and more single-family homes being built, makes it more likely that the Federal Reserve might raise interest rates.
Further reading: ONS