July witnessed a significant drop in food store sales volumes, falling by 2.6%.
- This decline follows an earlier increase of 1.1% in June, highlighting market volatility.
- Cost-of-living pressures continue to impact consumer spending habits across the UK.
- Adverse weather conditions also contributed to the reduced sales, affecting seasonal purchases.
- Digital sales witnessed an uptick, accounting for 27.4% of retail activity.
The most recent data from the Office of National Statistics (ONS) highlights a substantial 2.6% decline in food store sales volumes in July, in contrast to the 1.1% increase recorded in June. This downturn is indicative of the significant pressures being placed on household budgets by the ongoing cost-of-living crisis.
Retail sales volumes overall are estimated to have fallen by 1.2% last month after showing a 0.6% growth in June. Supermarkets reported that the reduced sales were partly attributed to poor weather, which dampened demand for summer clothing and contributed to a reduction in food sales.
Consumers increasingly turned to online shopping, with digital transactions constituting 27.4% of retail sales in July 2023, an increase from June’s 26% and the highest since February 2022. This shift is reflective of both adverse weather conditions and heightened promotional activities online.
The rise in sales at automotive fuel stores, which saw a 0.7% increase in July, offers a contrast to the overall downward trend seen in food sales. This growth followed a decrease of 0.6% in June, underscoring shifting consumer priorities.
Annual food and non-alcoholic beverage prices surged by 14.9% up to July 2023, significantly impacting consumer purchasing power. Additionally, food store sales volumes remain 5.1% lower than the pre-pandemic levels of February 2020, illustrating a persistent challenge in the market.
Ruth Gregory, Deputy Chief UK Economist at Capital Economics, provided insights into the situation, noting that July’s decline was partially due to it being the sixth wettest on record since 1836. She also pointed to the negative effects of the Bank of England’s interest rate increases and declining consumer confidence on overall spending expectations.
The Bank of England’s chief economist has further warned that, in light of geopolitical developments such as the conflict in Ukraine, food prices may never revert to previous lows.
The July decline in food store sales signals continued challenges for both retailers and consumers amid the broader economic pressures.
