Retailers experienced slowing sales last month as households reined in their spending amid mounting pressure on their finances.
Figures from the British Retail Consortium (BRC) and KPMG showed like-for-like sales grew by 0.9% in July, down from 1.1% for the same month last year.
It also marked a decline in contrast to June’s performance a month earlier when like-for-like sales rose by 1.2%.
BRC chief executive Helen Dickinson said food sales were the main growth driver as non-food sales slipped into reverse.
She said: “Sales growth slowed in July from June. That said, given the strong performance of the same month the previous year, the figures are fairly solid. 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.
“Despite the gloomy picture for non-food overall, there were some success stories. The homewares category for instance, which lost out in the previous month to summer wardrobe purchases, moved to the top of the performance rankings.”
Total sales rose by 1.4% last month, easing back from 1.9% in 2016 and below June’s performance of 2%.
Households have seen their spending power come under sustained pressure from lacklustre wage growth and higher inflation, leading to an expansion of credit and a decline in savings.
The cost of living had reached a near four-year high of 2.9% in May, before unexpectedly falling to 2.6% in June.
Paul Martin, KPMG’s UK head of retail, said: “Interestingly, July retail sales diverge from the latest consumer confidence figures, which noted a downturn in consumer sentiment.
“This divide suggests that UK shopping patterns remain mixed, although with demand continuing to be weak, retailers would be wise to remain cautious.”
The latest official figures showed retail sales had rebounded in June as consumers proved resilient by spending strongly on clothing during the warm weather.
The Office for National Statistics (ONS) said sales rose by 0.6% in terms of quantity compared with May, with a quarterly increase of 1.5%.
A separate report by Barclaycard said consumers forked out 3.5% more last month compared to 2016 due to rising supermarket prices.
Despite four in 10 consumers saying higher inflation forced them to change their spending habits, the report still saw a 12.5% rise in entertainment spending.