It’s no surprise that retail sales are down

Following last week’s news of unexpectedly strong economic growth in June of 0.5 per cent, today’s retail sales figures for July come as something of a shock. Across the month, the volume of sales fells by 1.2 per cent compared with June, and was 3.2 per cent lower than in July 2022. The fall occurred across the board, with food stores falling 2.6 per cent month on month, clothing stores 2.2 per cent and department stores – which had seemed to enjoy a revival in recent months – falling 2.9 per cent. The only positive news was on non-store retailing – i.e. the internet – sales were up 2.8 per cent. Again, this reverses the recent trend of a switch back towards bricks and mortar retailing following the pandemic.

A fall in retail sales ought not to come as a great surprise. Inflation is still three and a half times the Bank of England’s target.