UK retail sales bounced back in July after “non-essential” shops were reopened, according to a closely watched gauge that hit its highest level since April last year.
The CBI’s measure of retail sales volumes rebounded to a score of four in July from minus 37 in June. It indicated that sales grew slightly compared to the same period a year earlier, suggesting the sector is returning to normal.
Stronger grocery sales drove the jump in the gauge, the CBI said. Sales of hardware and DIY also returned to growth as Britons fixed their houses after months of lockdown.
However, CBI chief economist Rain Newton-Smith said the “picture remains bleak” for many retailers.
“It’s great to see retail sales stabilise this month, but this doesn’t tell the whole story. This crisis has created winners and losers within the retail sector.”
For example, wholesalers reported the fourth consecutive month of falling sales and orders, though at a slower pace than last month. Furniture, footwear and clothing shops also continued to suffer.
The CBI also predicted that overall sales are expected to dip slightly next month, with the gauge falling to minus five.
Internet sales grow but UK retail firms call for help
On the up side, internet sales continued to grow rapidly. Motor traders also reported a pick-up in sales in July after a collapse in the market from March to June.
The CBI’s distributive trades survey spoke to 133 businesses between 26 June and 15 July. The headline figure is the difference between the number of firms reporting an increase in sales and those reporting a decrease.
The government reopened non-essential shops in June as part of its phased reopening of the economy.
Newton-Smith said the move “was a vital step towards recovery but isn’t a cure-all”. She said companies are still cash-strapped and the government should consider more direct support such as extending business rates relief.
Chancellor Rishi Sunak unveiled a VAT cut for the hospitality and tourism sectors earlier this month but not for retailers.