In July, food store sales experienced a significant decline, reflecting ongoing economic challenges. The drop followed a brief rise in sales during June and highlights consumer behavior shifts amid volatile markets.
- Food store sales volumes decreased by 2.6% in July, reversing a 1.1% increase in June.
- Poor weather conditions contributed to the decline, affecting not only clothing sales but also leading consumers towards online shopping.
- Automotive fuel sales saw a slight recovery with a 0.7% increase after a decline in June.
- Food and non-alcoholic beverage prices rose significantly over the year, putting additional pressure on consumer spending.
In the midst of a challenging economic landscape, food store sales volumes in the United Kingdom experienced a notable decline of 2.6% in July, following a temporary 1.1% rise in June. This drop is indicative of the larger pressures facing household budgets as the cost-of-living crisis continues to unfold. According to data from the Office of National Statistics (ONS), overall retail sales volumes also experienced a downturn, decreasing by 1.2% in July following a modest increase of 0.6% in June.
The deteriorating weather conditions played a pivotal role in this decline, impacting summer clothing sales significantly. The poor weather not only hindered in-store shopping experiences but also drove consumers towards digital platforms, as evidenced by the increase in online shopping. In July 2023, 27.4% of retail sales occurred online, up from 26% in the previous month. This marks the highest proportion since February 2022, when online sales accounted for 28%.
Despite the downturn in food store sales, the automotive fuel sector experienced some recovery, with sales volumes increasing by 0.7% in July after a fall of 0.6% in June. This fluctuation illustrates the complex dynamics of consumer spending behavior amidst economic instability.
The increasing cost of living, particularly the sharp rise in food and non-alcoholic beverage prices, further exacerbated the decline in sales volumes. As reported by the ONS’ Consumer price inflation metrics, prices surged by 14.9% over the course of 12 months leading up to July 2023. Food store sales were 5.1% below the levels recorded before the COVID-19 pandemic in February 2020. This trend highlights the persistent economic strain impacting consumers.
Ruth Gregory, deputy chief UK economist at Capital Economics, remarked to the BBC that the wet weather was a significant factor contributing to the decline, labeling July as the sixth wettest since records began in 1836. However, she emphasized that the Bank of England’s continued interest rate hikes, coupled with declining consumer confidence, remain critical factors shaping the spending outlook for the year. In a related statement, the chief economist of the Bank of England suggested that food prices may remain elevated indefinitely due to geopolitical tensions, specifically citing the impact of the conflict in Ukraine.
The decline in July’s food store sales reflects broader economic challenges driven by cost pressures, adverse weather, and rising prices.
