Retail sales in Great Britain posted a surprise 1% month-on-month increase in June, confounding analyst forecasts of a 0.3% decline, as the prolonged heatwave and World Cup fervour fuelled consumer spending. The Office for National Statistics (ONS) revealed that year-on-year sales rose significantly to 4.2%, almost doubling the consensus expectation of 2.3%. This unexpected surge in volumes suggests that retailers are adapting well to shifting macroeconomic trends, with consumers continuing to spend despite heightened uncertainty.
The ONS highlighted a notable trend: internet sales reached their highest proportion of total retail sales since spring 2021, when coronavirus restrictions began to ease, accounting for nearly 25.5% of all transactions in June. Senior statistician Hannah Finselbach attributed this growth to promotional activities and the warm weather, driving demand for outdoor products, air conditioning units, and clothing.
Online retailers maintained their robust performance in June, with sales rising by 4.4%, albeit at a slower pace than May's 6.1% growth. Meanwhile, textile, clothing, and footwear stores enjoyed a strong month, with sales increasing by 1.9% compared to May – the largest monthly rise for clothing stores since September last year. Other non-food retailers excluding clothing, household goods, and department stores saw a 1.8% increase, boosted by sales from computer and telecoms businesses.
However, some sectors failed to share in the growth. Department stores recorded a 1.7% month-on-month decline in sales, contrasting with May's 2.5% rise when consumers rushed to purchase items like fans and paddling pools. Household goods stores also experienced a dip, with sales falling by 0.6% in June.
Samuel Edwards, head of client portfolio management at financial services firm Ebury, noted that retailers had "scored an early summer goal" in June, thanks to warm weather, promotions, and World Cup excitement driving consumer spending beyond expectations. While a recent increase in the energy price cap and persistently high interest rates pose challenges for retailers, Edwards also highlighted the risk of inflation stemming from renewed tensions in the Middle East.
Melissa Minkow, global director of retail strategy at CI&T, echoed this sentiment, pointing out that the warm weather played a significant role in June's sales figures. She added that July's data will be closely watched to gauge the impact of recent cost-of-living policies, as consumers typically adjust their spending based on anticipated effects on their finances.