After a depressing start to the summer in which retailers sold more soups and woolly jumpers than salads and swimming trunks, retail sales finally picked up in July, according to official figures, which show year-on-year retail sales increased by 1.1%. So perhaps retailers who compulsively whine about bad weather do actually have a point…
The figures, by the Office for National Statistics, show estimated weekly spend hit £7bn, up from £6.8bn in June this year and £6.7bn in July last year.
Supermarkets fared particularly well (presumably as people flocked to buy barbecue equipment), with sales growth of 2.5%. In fact, the whole food sector did well, growing by 2.1% - its highest year-on-year growth since April 2011.
Prices increased by 1.8% compared with July last year – although the ONS did point out most of the price rise was to do with goods sold in the food sector.
And the quantity of goods sold increased by 3%. Set against that 1.1% sales growth figure, that suggests many retailers were still having to engage in heavy discounting to lure customers to their stores.
But it’s worth pointing out that this is despite the fact that last July, consumers were buying flags and Team GB t-shirts like they were going out of fashion during the run-up to the Olympics.
Indeed, this time last year the ONS reported a 2.8% year-on-year rise in sales. So if you strip out the effect of Team GB hysteria (‘of course wearing a Jessica Ennis crop top will give me abs like hers’), the rise was probably slightly higher than 1.1%.
Barclays head of retail and wholesale Richard Lowe could barely contain his excitement.
‘July was a triumph for retailers, and in particular food retailers, as consumers got into the spirit of the summer with great weather and sporting success helping to boost confidence,’ he enthused.
‘With the new school year just around the corner, many retailers will be hoping the summer’s feel good factor continues as parents and students get ready for the start of term.’
In the past couple of weeks we’ve had good news stories about unemployment, housing, and the services and manufacturing sectors – suggesting the UK is well on its way to recovery.
So did Bank of England governor Mark Carney err on side of caution when he chose to tie interest rates to unemployment (which remained flat at 7.8% yesterday)? With all the signs showing things are looking up, it might be prescient to begin edging up interest rates sooner, rather than later.
Although factions of the City already think unemployment will drop to 7% (the level at which a rise in interest rates will be triggered) before Carney’s 2016 forecast. There are even rumours some traders have begun to bet that the Bank will raise rates in May 2015 – a year sooner than the governor thinks.
- Image: Flickr/jacobchirstensen