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A boost to food and drink sales over the Queen’s jubilee weekend was not enough to prevent the cost of living crisis from pushing down retail sales last month.
The Office for National Statistics (ONS) said sales volumes dipped 0.1% in June, after a 1.2% rise in food and drink sales failed to offset a slide in clothing, as well as consumers’ reluctance to purchase furniture and other big ticket items.
Petrol sales, hit by a 20% increase in prices, slumped by 4.3%, and in a further blow to retail, a fall of 0.5% in May was revised down to 0.8%.
Earlier this month, the British Retail Consortium business group said most retailers were experiencing a significant drop in sales despite the jubilee weekend, which mainly benefited supermarket chains.
Figures this week revealed inflation hit 9.4% in June, while wages growth in the three months to May languished at about 4.3% without bonuses.
The gap between salaries and the cost of living has risen to the top of most people’s list of concerns, according to the latest Ipsos/Mori poll, higher than poverty and social inequality and crime and violence.
The ONS said in its release on Friday that consumers’ appetite for buying goods online also continued to wane last month after the proportion bought over the internet fell to its lowest level since the beginning of the pandemic.
The proportion of sales that were made online fell to 25.3% in June, the lowest since the 22.8% recorded in March 2020, continuing a broad downward trend since its peak in February 2021 of 37.4%.
There is likely to be little respite for retailers when sales figures appear for July after the GfK consumer confidence barometer revealed a record slump in June was repeated this month.
Lynda Petherick, the head of retail for Accenture in the UK and Ireland, said: “The continuing slide in consumer spending is another blow to a retail sector already grappling with increasing costs and decreasing customer spending.
“Many businesses will have been hoping that the Queen’s platinum jubilee and the long weekend would have given them cause for celebration, but it clearly wasn’t enough to offset battered consumer confidence.”
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Aled Patchett, the head of retail and consumer goods at Lloyds Bank, said: “The figures show how retailers are having to act quickly to combat a twofold inflationary challenge.
“As the cost of goods goes up, there is increasing pressure on businesses to reduce prices as consumers cut back on their discretionary spending, prioritise discounts and offers, and switch to ‘value’ and non-premium brands.
“Such cuts may narrow margins but are essential to maintaining cashflow. Add to that the higher pay demands of employees trying to keep up with the cost of living, and the squeeze on retailers gets tighter.”
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