Retail sector outperforms expectations as department stores report summer boost

The UK’s retail sector did better than expected in June, new official data shows.

Retail sales rose 0.7% last month, the Office for National Statistics (ONS) said.

Experts had forecast a rise of 0.2%, according to an average supplied by Pantheon Macroeconomics.

Sales in supermarkets and other food shops, which had fallen as people ordered more takeaways during May’s extra bank holiday, bounced back, the data showed.

Department stores said they benefited from the weather, which drove more people into their shops. Summer sales also impacted volumes, which were up 1.9%.

The ONS also revised May’s figure. It originally estimated a 0.3% rise, much better than expected, but on Friday it revised this down to 0.1%.

The figures measure the amount bought – volume – rather than the amount spent – value.

Grant Fitzner, ONS chief economist, said: “Retail sales grew strongly, with food sales bouncing back from the effects of the extra bank holiday, partly helped by good weather, and department stores and furniture shops also having a strong month.

Retail sales grew 0.7% in June 2023 following a rise of 0.1% in May.

There were increases across all main sectors except motor fuels.

➡️ https://t.co/5QhFVKeAWv pic.twitter.com/ZR4GvHZ0Jq

— Office for National Statistics (ONS) (@ONS) July 21, 2023

“However, these were partially offset by falls in fuel, garden centres and clothes shops.

“Growth still fell on an annual basis, but at its slowest rate since the beginning of the Ukraine war.”

The data also showed the value of what people spent in retailers also grew 0.7% last month.

Overall, since February 2020, the last month before the Covid pandemic hit the UK’s economy, the volume of what people have bought dropped 0.2% while the amount they spent has risen 17.9%.

This means shoppers are having to pay considerably more to get slightly less than they were before.

Aled Patchett, Head of Retail & Consumer Goods at Lloyds Bank, said: “A rise in sales is to some extent not surprising with record temperatures spurring consumers to spend on summer clothing and outdoor goods.

“A combination of continued hikes in interest rates and the high cost of living is making shoppers less willing to spend on discretionary goods.

“That said, a downturn in energy usage throughout the summer months could provide relief for households, freeing up some disposable income.”