British retail sales volumes declined 0.5% in July, reversing June’s World Cup and hot-weather boost, as clothing and footwear spending dropped 2.7%—the steepest monthly fall since May 2025.
Annual sales growth eased to 1.6% from a downwardly revised 3.8% in June, undershooting expectations for a 2.2% increase. The slowdown followed a June surge driven by promotions, warm weather and the men’s soccer World Cup, which pulled forward summer sales activity into the earlier month.
Clothing retailers bore the brunt of the reversal, with sales plunging 2.7% month-on-month. Jacqueline Windsor, head of retail at PwC UK, noted that many stores had launched summer discounts in June rather than July, amplifying the July decline. She added that the current retail outperformance was unlikely to persist into autumn, particularly ahead of the critical Christmas trading period.
Martin Beck, chief economist at WPI Strategy, described July’s drop as a pause rather than the start of a renewed consumer downturn. Sterling held steady against the dollar after the data release, which coincided with figures showing higher-than-expected government borrowing in July.
Consumer demand remained resilient despite elevated energy costs stemming from geopolitical tensions, including the U.S.-Israeli conflict with Iran. The government has scheduled the removal of value-added tax on household electricity bills for October, though households face uncertainty over potential tax changes in the upcoming budget. Prime Minister Andy Burnham has pledged to maintain major tax rates unchanged.
Retail fortunes diverged by sector: clothing retailer Next raised its annual profit outlook for the third time this year, citing sustained hot weather, while JD Sports issued a profit warning, attributing weakness to U.S. markets rather than the UK. The GfK consumer confidence indicator rose to a two-year high in August, reflecting improved sentiment since Keir Starmer’s tenure as prime minister.
