British retail sales volumes fell 0.5% month-on-month in July, marking the first monthly decline since April and aligning with market expectations.
Core retail sales, excluding automotive fuel, dropped 0.9%, exceeding the consensus forecast for a 0.5% decline by 0.4 percentage points. Clothing sales volumes declined 2.7% over the month, while food store sales rose 0.5%, supported by the World Cup and unseasonably warm weather. Non-food sales volumes fell 1.3%, reflecting weaker demand across department stores and household goods retailers.
The three-month measure to July showed resilience, with total sales volumes up 1.1% compared with the three months to April. Year-on-year, sales were 1.6% higher than in July 2025, reaching the second-highest level since April 2022. James Bentley of Financial Markets Online noted that overall sales volumes over the three months were 3% higher than the same period a year earlier.
Online retail sales values fell 3.9% in July from June, following a 2.5% increase the prior month. Despite the monthly decline, online sales remained 6.5% higher than in July 2025, though the proportion of retail sales conducted online dropped to 28.3% from 29.2% in June.
Consumer confidence, measured by GfK, rose to a two-year high of -14 in August, up from -17 in July. Analysts attributed the July retail slowdown to demand being pulled forward into June by promotions, alongside weather-related factors such as hotter conditions reducing footfall in clothing stores.
Ashley Webb, senior UK economist at Capital Economics, highlighted that clothing sales were impacted by earlier discounts shifting purchases into June and elevated temperatures curbing store visits. Food sales benefited from sporting events and warm weather, while household goods retailers saw demand normalize after heatwave-driven strength in May and June.
Capital Economics projects annual retail spending growth to accelerate from 1.6% in July to about 3% in August, though overall consumer spending growth for 2026 is forecast at just 0.7%.
