Retail sales fall as cold weather and general election hit spending

Retail sales in Britain fell last month as the country struggled with bad weather and uncertainty over the general election.

The latest figures from the Office for National Statistics show that sales volumes fell by 1.2 percent in June, three times the 0.4 percent fall analysts had predicted.

By comparison, retail spending rose 2.9 percent the previous month, as the UK experienced its warmest May on record and promotional activity provided a strong boost to trade.

Although June was drier than average, the first two weeks were colder than normal due to northerly winds bringing arctic air across the country.

Of the eight retail sectors tracked by the ONS, only sales of motor fuels showed an increase last month, up 2.1 percent.

By comparison, department store sales fell 3.4 percent overall and 9.4 percent online. Clothing, shoe and furniture stores also suffered from weak demand.

Meanwhile, supermarket sales fell by 1.1 percent, with the ONS blaming the decline largely on supermarkets, but also on “poor weather and economic conditions” that have caused Britons to be more cautious with their spending.

Matt Jeffers, managing director of retail strategy and consulting at Accenture UK & Ireland, said retailers would be “very disappointed” by the figures “as many had hoped that the many cultural and sporting events taking place during the month would provide a welcome boost”.

Major events included the Glastonbury Festival, the European Football Championship and the UK leg of Taylor Swift’s Eras tour.

Barclays estimates that the 15 concerts on the Eras tour in June and August will boost the UK economy by almost £1 billion this year, as enthusiastic fans spend huge amounts on tickets, travel, hotels and outfits.

However, some analysts blame the ‘Taylor Swift effect’, which has contributed to rising hotel prices and kept UK inflation at the 2 percent target for the second month in a row.

This reduces the likelihood of the Bank of England cutting interest rates in August, giving borrowers a much-needed boost and encouraging consumers to spend more in stores.

Financial markets are now predicting that the chance of a rate cut at the BoE’s upcoming meeting on August 1 is 35 percent, rather than the 50 percent previously predicted.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘With high interest rates likely to remain in place throughout the summer, buying a new sofa or dining table isn’t exactly top of the priority list.’