According to official data released on Friday, British retail sales in July fell more than expected, as poor weather affected consumer spending. Retail sales volumes dropped by 1.2 percent, worse than the forecasted 0.5 percent decline. This decline follows an increase in sales in June due to warmer weather and competitive pricing. Analysts warn that this decrease may indicate a decrease in consumer confidence after a year of rising interest rates.
Heather Bovill, Deputy Director for Surveys and Economic Indicators at the Office for National Statistics, stated that the poor weather had a negative impact on supermarket sales, as well as sales of clothing and household goods.
Food store sales volumes decreased by 2.6 percent, while non-food store sales fell by 1.7 percent. However, online retailers benefited from the wet weather, with online sales accounting for 27.4 percent of all retail sales.
Capital Economics, in its analysis, expressed a pessimistic outlook for overall spending this year, citing the impact of interest rate hikes and falling consumer confidence. They predict a 0.5 percent decrease in real consumer spending due to the drag on activity from higher interest rates.
Britain continues to face a cost-of-living crisis and sluggish economic growth, with the risk of recession looming. The Bank of England has raised interest rates over a dozen times in an attempt to control inflation, but these increases may have negative repercussions on the economy.
In summary, the unexpected decline in July retail sales in the UK may be attributed to poor weather and a decrease in consumer confidence. Analysts predict a continued decrease in overall spending this year due to rising interest rates. The country’s struggling economy and cost-of-living crisis also pose a risk of recession.
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