British retail sales volumes fell 0.5% in July, the first monthly drop since April, as the post-June spending surge faded and consumer caution grew.
Core retail sales, excluding automotive fuel, declined 0.9%, missing expectations by 0.4 percentage points. The clothing sector led the downturn with a 2.7% drop, driven by earlier promotions that pulled sales into June and unseasonably warm weather that reduced footfall, according to Ashley Webb, senior UK economist at Capital Economics.
Food store sales rose 0.5% over the month, supported by the World Cup and warm weather, while non-food sales declined 1.3%, offsetting gains in food. Department stores faced supply constraints, and household goods retailers reduced activity following strong volumes in May and June amid heatwave-driven demand.
Online retail sales values fell 3.9% month-on-month in July, reversing June’s 2.5% gain. Despite the monthly decline, online sales remained 6.5% higher than a year earlier, though their share of total retail sales slipped to 28.3% from 29.2% in June.
Over the three months to July, total sales volumes rose 1.1% compared with the prior three-month period, and were 1.6% higher than in July 2025, reaching their second-highest level since April 2022. James Bentley, director at Financial Markets Online, noted that all retail sectors except fuel recorded growth over the quarter, but warned that elevated fuel prices linked to the Gulf conflict were prompting drivers to cut back on journeys.
Consumer confidence improved to a two-year high of -14 in August, up from -17 in July, according to GfK. Capital Economics projects annual retail spending growth to accelerate from 1.6% in July to about 3% in August, though it forecasts overall consumer spending for 2026 to rise just 0.7%. Consumer price inflation ticked up in July, adding to concerns over spending momentum.
