High inflation hits UK retail sales in July

THE WEAKNESS of the UK’s consumer recovery was underscored yesterday, after official figures revealed retail sales rose by just 0.2 per cent in July.

Clothing sales were particularly weak as cash-strapped households reined in their spending, the figures from the Office for National Statistics (ONS) showed. Analysts had pencilled in a 0.3 per cent rise compared to a month ago, after retail sales grew 0.8 per cent in June.

Consumer spending is being hit by the worst squeeze on take-home pay in recent times. Earlier this week, the Bank of England said consumer price inflation jumped to 4.4 per cent in July and is likely to rise further still.

Nomura analyst Philip Rush said: “With large utility price hikes being implemented between August and October, the squeeze on household budgets still has further to run. Poor confidence, exacerbated by global pressures, is also likely to urge spending restraint by households.”

The ONS said volume sales of clothing and footwear fell 0.3 per cent in July with household goods declining by the same amount. Food sales were up 0.7 per cent.

Since the start of the year a number of well-known retailers have gone into administration, including fashion chain Jane Norman, interior designer Habitat and wine seller Oddbins.

Stephen Roberston, director of the British Retail Consortium, said: “This confirms the painful picture painted by our own figures last week. Conditions are increasingly difficult for customers and retailers.”