Food inflation drives ‘fairly solid’ growth in retail sales

Total sales in July rose 1.4%, a slight slowdown from the 2% growth the previous month, according to the BRC-KPMG Retail Sales Monitor.

Helen Dickinson, chief executive at the British Retail Consortium, said this month’s figures are “fairly solid” considering the strong performance of the same month the previous year.

Like-for-like retail sales increased by 1.1% in July 2016.

Dickinson added: “Closer inspection of the headlines, however, unveils some familiar challenges.

“The month’s growth was underpinned by food sales alone, while non-food sales relapsed into negative territory as the competition heats up over a shrinking pool of discretionary consumer spending power.”

Over the three month period to July, food sales increased by 2.3% on a like-for-like basis and 3.4% on a total basis.

During the same period, non-food like-for-like sales dropped 0.7% and total sales fell 0.4%.

Like-for-like food growth has been driven more by price increases than by a rise in volumes, but food inflation appears to be waning.  

Growth cools

Joanne Denney-Finch, chief executive at IGD, said: “After June’s heat wave, retail sales growth cooled a little in July as the weather became more unsettled and food inflation eased slightly.”

The homewares category bucked the trend in non-food as it rose to the top of the performance rankings, after losing out in the previous month to summer wardrobe purchases.

Paul Martin, UK head of retail at KPMG, said: “From afar, retail performance appears to have been stable in July.

“Looking at the figures in more detail though, the food sector continues to perform strongly whilst non-food sales struggle. The rainy month turned attention indoors, with furniture and home accessory sales benefiting.

“For online retailers, everyone appeared to be a winner, but once again health and beauty was a strong performer in the month.”

Online sales of non-food products grew 8.3% in July month-on-month, compared to 11.2% a year earlier.