Thursday 15 August 2019 9:58 am

UK retail sales get surprise boost in July from stay-at-home shoppers

British shoppers bought more than expected in July, the Office for National Statistics (ONS) said today, in a sign that consumer spending could help the UK economy escape recession in the third quarter.

Read more: BRC: July 2019 worst on record for retail sales growth

The 0.2 per cent increase in the quantity of retail sales was above the minus 0.2 score economists had predicted. Yet it was well below the 0.9 per cent growth in sales seen in June and comes as the UK economy slows considerably.

Even consumer spending, which has held up relatively well under Brexit and a global slowdown, could not stop British GDP contracting in the second quarter of the year.

Online shopping drove the rise in retail sales in July, with non-store retailing surging by 6.9 per cent. Department stores also saw a surprise rise in sales for the first time this year.

In the three months to July 2019, the quantity bought in retail sales increased by 0.5 per cent when compared with the previous three months. Yet food stores and fuel stores witnessed a decline in sales.

Rhian Murphy, head of retail sales at the ONS, said: “Retail sales saw only modest growth in the latest three months.”

“Although still declining across the quarter, there was an increase in sales for department stores in July for the first time this year. Strong online sales growth on the month was driven by promotions.”

Online sales accounted for 19.9 per cent of the total in the retail sector in July, up from 18.9 per cent a year earlier.

Philipp Gutzwiller, head of retail at Lloyds Bank Commercial Banking, said: “The retail sector continues to defy expectations and show further growth on the back of a generally positive first half of the year.”

“The falling pound has in no doubt benefited retailers in the short term, with more Brits staying at home this summer and potentially spending their increase in real-term wages on fashion and home improvement.” 

“However, many businesses – including food retailers – will be wary of the inevitable impact on prices further down the line.”

Gabriella Dickens, assistant economist at Capital Economics, said: “The rise in retail sales in July was encouraging and supports our view that the economy has picked up in the third quarter.”

Read more: UK manufacturers gloomy but consumers more upbeat

“Even if sales stagnate in August and September, retail sales would still rise by 0.7 per cent quarter on quarter in the third quarter as a whole, the same as in the second quarter.”

(Image credit: Getty)