Britain’s retailers recorded a sharp rise in spending in June as hot weather prompted consumers to buy summer clothing and outdoor goods, despite growing pressure on budgets from the cost of living crisis.
The British Retail Consortium (BRC) said sales increased by 4.9% in June, above the annual average growth rate, as shoppers hit the high street to buy swimwear, beach towels, outdoor games, garden furniture and barbecue food.
Much of the increase was driven by high inflation pushing up the overall value of spending, masking a drop in sales volumes. However, the figures suggest a pickup in sales from May when a trio of bank holidays, including for King Charles’s coronation, failed to get shoppers spending.
Helen Dickinson, the chief executive of the BRC, said: “Sun-seekers headed to their favourite retailers to buy swimwear and beach towels, and outdoor games, garden furniture and barbecue food were boosted as families came together to celebrate Father’s Day.
“People were much more cautious about big-ticket purchases like furniture and technology equipment.”
The Met Office confirmed June was the hottest on record for the UK, eclipsing the previous hottest by nearly a full degree, amid growing anxiety over the pace and scale of global heating.
Retailers warned that consumer confidence remained fragile as high inflation, running at 8.7% in May, erodes the spending power of households. Millions of mortgage holders are also facing an increase in borrowing costs after 13 consecutive interest rate rises from the Bank of England, draining billions of pounds of spending power from the economy.
Prices remain high and are rising fast, adding to pressure on struggling households. Official figures show food and drink inflation is at the highest levels since the late 1970s, running at 18.3% in May after a modest drop from 19% in April.
The BRC said food sales increased by 9.8% on a total basis, driven largely by high inflation.
Paul Martin, the UK head of retail at the accountancy firm KPMG, said: “Consumers have so far remained resilient, but the triple threats of further interest rate hikes, resolute double-digit food inflation and an economy recovering at slower rate than predicted could hamper a return to much needed profitable growth across the retail sector.”
Barclays said the surge in living costs meant two-thirds of shoppers were looking for ways to reduce the cost of their weekly shop, with as many as two in five buying more “yellow sticker” short-dated food and drink to help their finances go further.
The bank, which processes nearly half of the nation’s credit and debit card transactions, said spending in restaurants in June fell by the most since the start of the year, as consumers cut back on eating out to offset rising household bills.
However, it said the overall value of sales rose 5.4% on the year as sunny weather tempted shoppers to buy new summer outfits. Pubs, bars and clubs recorded strong growth in sales, helped by warmer weather, rising beer prices and Father’s Day.
After a drop in sales in May, sports and outdoor retailers benefited from rising temperatures and the start of the festival season, as consumers bought camping equipment and other goods.
Will Hobbs, the chief investment officer at Barclays’ UK wealth management division, said the economy remained in a “precarious spot”.
“Difficult quarters lie ahead as the surge in interest rates continues to put pressure on household cashflows,” he added.
