The summer of sport helped push retail sales up in July, official data shows.
It has been a busy few months for sports fans, with Euro 2024, Wimbledon and the Paris Olympics, but falling inflation appears to have boosted consumer confidence and more people have hit the shops to take part.
Office for National Statistics (ONS) figures show retail sales volumes are estimated to have risen by 0.5% in July 2024.
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The increase was led by department and sports equipment stores, which reported a boost following summer discounts and sporting events.
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It follows a fall of 0.9% in June 2024, which has been revised up from a 1.2% fall.
More broadly, sales volumes rose by 1.1% in the three months to July 2024, when compared with the three months to April 2024.
“It’s still a pretty tricky time for retailers despite sales recovering somewhat in July,” says Danni Hewson, AJ Bell head of financial analysis.
“The summer sun finally made an appearance, and the country was in a celebratory mood as England’s male footballers made it to the Euro 2024 finals.
“Children across the country wanted to emulate their heroes in parks and at local pitches and many adult supporters just wanted the right kit when they headed to their local pubs to raise a glass whilst watching the drama unfold.”
It comes as official data this week shows UK GDP rose 0.6% in the second quarter of 2024 but shoppers are still facing pressures on their wallet as grocery prices are on the rise.
What are shoppers spending their money on?
The busiest retail sectors in July were department stores and other non-food outlets, up 1.4% in July, the ONS said.
The ONS says: “Department stores and sports equipment stores grew strongly with retailers suggesting that summer discounting and sporting events, such as the European football Championship, boosted sales.”
The amount spent online rose by 2.5% during July 2024, and by 3.6%, compared with July 2023, the ONS said.
“Labour's landslide election victory, the recent interest rate cut and falling mortgage costs have likely all played their part to support UK consumer spending,” says Charlie Huggins, manager of the quality shares portfolio at Wealth Club.
“Overall, the UK economy appears to be chugging along, with little sign that consumers are significantly cutting back. With inflation moderating, paving the way for further interest rate cuts, retailers can look ahead to the rest of the year with a degree of optimism."
Hewson adds that sporting optimism didn’t completely obliterate cash concerns and consumers were still searching out deals before they opened their wallets.
“Stuff still costs more than it did a couple of years ago and even as inflation stuck at ‘normal’ levels in July, people’s disposable income isn’t stretching as far as it used to – something starkly evident when you look at the ONS graph showing the difference between volumes and values,” she says.
Not every retailer enjoyed a mid-summer bounce back.
Clothing and furniture sales were still subdued, and fuel sales were down almost 2% despite prices at the pump falling.
“There is still a degree of uncertainty hanging over the British public’s heads,” adds Hewson.
“Inflation is so much lower than it was, but we know fuel prices will rise this autumn and grocery prices have ticked higher this month.”
Will interest rates be cut in September?
The Bank of England cut interest rates in August but there is uncertainty about when the next reduction will be.
Rising retail sales as well as GDP growth suggests a strong economy and may delay further cuts, plus there is also the chancellor’s October Budget, with tax rises rumoured, which could change the public’s mood.
“Even with interest rates expected to fall further there’s a niggling concern about what October’s Budget might mean for all our finances,” adds Hewson.
“We understand the importance of consumer confidence for economic growth – of people not only feeling better off but being prepared to spend.
“For retailers the coming months are important as nights draw in and thoughts turn to paying for those presents under the tree.”
