Belfast Telegraph

Warm June spending spree helps retail sales figures rebound

Retail sales rebounded last month as one of the warmest Junes on record inspired a spending spree on summer clothes and beauty products.

Figures from the British Retail Consortium (BRC) and KPMG showed total sales rose by 2% in June, up from 0.2% growth for the same month last year.

Online sales of non-food products also bounced back from May's record lows, expanding by 10.1% last month in contrast to a 9% jump in June 2016.

Paul Martin, KPMG's UK head of retail, said businesses should remain cautious, with inflation and household debt "fuelling part of this retail growth".

He said: "For fashion retailers the boost in sales could not have come soon enough. Following a challenging year so far, it appears the higher temperatures thankfully provided an increased interest in summer collections.

"Elsewhere, the sun also shone on health and beauty sales too, with the category continuing to be a top performer."

On a like-for-like basis - which excludes new store openings - sales grew by 1.2% over the period, compared to a 0.5% fall last year.

Total food sales also expanded by 4.7% for the three months to June - the strongest 16-week average since February 2012.

While the warm weather heralded a "welcome pick-up" for sales growth, BRC chief executive Helen Dickinson questioned whether spending could continue amid rising inflation and sluggish wage growth.

Inflation jumped to a four-year high at 2.9% in May, according to the Office for National Statistics (ONS), while average earnings recorded a month-on-month fall of 0.2% to grow by 2.1% in April.

Ms Dickinson said: "The six-month average, buoyed by June's strong performance, now paints a slightly rosier picture for retail sales.

"But on closer inspection, the year-on-year numbers belie the fact that rising food prices are responsible for the main component of growth and have prompted more cautious spending towards discretionary non-food items.

"The reality is that retailers' efforts in absorbing mounting cost pressures into their margins are already being tested, so the Government must have the consumer front of mind as it enters the UK's trading negotiations with the EU, to avoid any further cost increases to retailers and their customers."

Separate figures from Barclaycard showed consumer spending growth had dropped to a 15-month low at 2.5% for June.

It said shoppers were cautious last month as they grappled with the "new normal" of higher prices and lower wage growth.

However, the leisure industry was shielded from the slowdown, with restaurants and pubs enjoying 13.6% and 11.4% rise respectively.