Yahoo Finance Jubilee fails to lift retail sales as shoppers tighten purse strings
The Platinum Jubilee failed to prevent a fall in retail sales in June, with UK households buying less because of soaring food prices.
The Office for National Statistics (ONS) said sales volumes dipped 0.1% in June, after a 1.2% rise in food and drink sales failed to offset a slide in clothing.
Non-food stores, such as clothing and household goods, which slumped by 4.7% and 3.7% respectively, were hit particularly hard.
Meanwhile, automotive fuel sales volumes fell 4.3% amid record high prices.
Some had hoped that the Queen's Platinum Jubilee would give shops a major boost.
Read more: UK consumer confidence stays at historic low amid cost of living squeeze
Heather Bovill, ONS deputy director for surveys and economic indicators, said: “After taking account of rising prices, retail sales fell slightly in June and although they remain above their pre-pandemic level, the broader trend is one of decline.
“After a fall in May, food sales picked up due to the jubilee celebrations, but this was the only sector to report an increase.”
As prices have started to rise steadily amid soaring inflation, the volume of goods sold has begun to fall.
Bovill suggested “concerns around affordability” had more of an impact on demand for clothing and household goods.
With inflation set to peak above 11% later in the year, it's likely this trend will only continue as the cost of living bites.
The British Retail Consortium said there are “hard days ahead” for UK consumers.
“The cost of living crunch caused by record inflation continues to damage consumer confidence and stifle household spending. Discretionary spending and particularly bigger purchases were put off as consumers become increasingly concerned about the future. As a result, furniture sales and white goods were particularly hard hit, while food sales held up a little better,” Helen Dickinson, chief executive, said.
Read more: Help for Households: Which UK retailers are offering discounts?
“Retailers are squeezed between higher costs and weaker demand, resulting in the most challenging trading period since the start of the pandemic,” she added.
FX analyst Viraj Patel said the UK consumer is in a "dire state", adding that the sharp fall in online shopping is a "red flag".
⚠️ The UK consumer remains in a dire state. Small bump higher in core UK retail sales but not good enough. All food related around Jubilee weekend. Spending across other items fell. What's a red flag is online spending falling sharply. This is one for a 25bps BoE hike in Aug $GBP pic.twitter.com/EXRmjLZot4
— Viraj Patel (@VPatelFX) July 22, 2022
The sales decline was the biggest since October last year, when labour shortages and supply constraints led to shortages at forecourts across the UK.
Lynda Petherick, head of retail at Accenture, says retailers face a tough choice between swallowing costs or raising prices.
“During a week in which inflation continued to climb and business confidence fell to a record low, firms remain stuck with the unsavoury choice of swallowing rising costs or passing them on to shoppers,” she said.
Read more: UK workers suffer record drop in real terms pay
“Customer loyalty is everything, so at a time when profit margins are being threatened by rising costs and tightening consumer belts, technology will be the key to reducing brands’ outgoings and their subsequent prices by ensuring maximum productivity and delivering a better experience for customers and employees alike,” she added.
While sales volumes were up 2.2% above their pre-coronavirus levels from February 2020, they were down when compared with the volumes from June 2021, when shoppers unleashed pent-up demand after lockdowns ended.
