UK retail sales in July 2023 fell by 1.2% in volume terms, the Office for National Statistics (ONS) has confirmed, a steeper drop than the 0.5% decline initially reported and sharper than most observers had pencilled in. The ONS’s own revised figures for June also tell a different story: the 1.0% rise cited in early reports has been revised down to 0.6%.
What the UK Retail Sales July 2023 Data Actually Shows
The headline figure masks a split picture across categories. Non-food stores bore the brunt, with sales volumes falling 1.7% in July after a 0.6% rise in June. Retailers told the ONS the culprit was poor weather, which cut footfall and eroded the momentum from June’s promotions-led surge.
Food stores fared even worse: volumes fell 2.6% over the same period. Supermarkets pointed to wet weather reducing clothing sales, but also acknowledged the familiar headwind of cost-of-living pressure and elevated food prices continuing to drag on volumes. When consumers are watching every penny, discretionary food spending is often the first to go.
The one bright spot in bricks-and-mortar was automotive fuel, where volumes rose 0.7% following a 0.6% fall in June. Online retailing also held up: non-store sales grew by 2.8%, with retailers crediting a range of promotions for driving the uplift.
ONS chief economist Grant Fitzner offered some reassurance in his statement. ‘Retail sales increased in the latest three months, with all main sectors, apart from motor fuel, seeing growth. Some retailers told us that hot weather and promotions helped sales of outdoor products and items such as fans, with clothing and online sports merchandise also doing well.’ The three-month trend is the frame policymakers will lean on, even if the monthly print is an uncomfortable read.
Cost of Living and Consumer Confidence: A Fragile Balance
The retail data lands against a backdrop of consumer confidence that has improved, but remains historically depressed. GfK‘s Consumer Confidence Index rose to -14 in July from -17 the previous month, a two-year high according to the widely followed tracker.
Yet GfK’s consumer insights director Neil Bellamy struck a cautious tone, warning that ‘there are still many challenges ahead that will test the mettle of UK consumers.’ Inflation is rising again, energy bills have climbed, and tensions in the Middle East add a further layer of uncertainty. A reading of -14 is better than -17, but it is still deeply negative. Consumers are not in a spending mood; they are simply less gloomy than they were.
That distinction matters for how the July retail numbers should be read. The June surge, which the ONS has now revised down to a more modest 0.6%, was partly an artefact of retailers pulling promotions forward in response to hot weather. July paid the price for that borrowed demand, with reduced promotions in household goods and clothing a direct factor in the pullback.
Alcoholic drinks and beverages were the exception, with shops in that category performing well. Retailers attributed the resilience to a combination of promotions, the persistent heat, and the Women’s World Cup driving sales of drinks for at-home viewing.
The broader macro setting remains choppy. Brent crude was trading at $93.42 a barrel on Friday, down 0.38% on the day but elevated against levels seen earlier in the week, as US-Iran tensions kept oil markets on edge. Asian equity markets were mixed: Japan’s Nikkei index slipped 0.53%, while South Korea’s Kospi added 0.87% and the Hang Seng gained 0.92%. Stress in global bond markets, meanwhile, showed little sign of easing.
The ONS will publish flash PMI data alongside this week’s retail print, giving markets a more current read on whether activity has stabilised into August. If weather patterns have normalised and promotions return, some of July’s losses should unwind. But with food price inflation still biting and household budgets squeezed, a sharp rebound is far from guaranteed. The three-month trend Fitzner pointed to is the floor, not the ceiling.
