Summer sports boost high-street retail sales have increased
UK Retail Sales See Modest Growth Amidst Economic Uncertainty
The UK economy experienced a modest growth in retail sales and GDP in the second quarter of 2024, according to official data. Retail sales volumes are estimated to have risen by 0.5% in July 2024, and by 1.1% in the three months to July 2024, compared to the three months to April 2024.
Charlie Huggins, manager of the quality shares portfolio at Wealth Club, attributes this growth to a combination of factors. He cites the Labour's landslide election victory, the recent interest rate cut, and falling mortgage costs as likely contributors to the support of UK consumer spending. Danni Hewson, head of financial analysis at AJ Bell, adds that the summer sun and sporting events, such as Euro 2024, Wimbledon, and the Paris Olympics, have also played a significant role.
The busiest retail sectors in July were department stores and other non-food outlets, which reported a rise of 1.4%. The increase in retail sales can be attributed to summer discounts and sporting events, as shoppers bought sports equipment and clothing to emulate their favourite athletes and celebrate the success of England's male football team in Euro 2024.
However, not every retailer enjoyed a mid-summer bounce back. Clothing and furniture sales were still subdued, and fuel sales were down almost 2% despite prices at the pump falling. Shoppers are facing pressures on their wallet due to rising grocery prices. Hewson expresses a concern about what October's Budget might mean for all our finances, as rumours of tax rises circulate.
Online sales also saw a growth, with the amount spent online rising by 2.5% during July 2024, and by 3.6%, compared with July 2023. This follows a fall of 0.9% in June 2024, which has been revised up from a 1.2% fall.
Meanwhile, in Germany, consumers primarily purchased second-hand products in July 2024. Significant spending was reported in categories such as smartphones, tablets, small household appliances like coffee machines, and air fryers, reflecting a growing trend in the second-hand market due to rising living costs.
Despite the positive growth, there is still a degree of uncertainty hanging over the British public's heads. Inflation is lower than it was, but fuel prices will rise this autumn and grocery prices have ticked higher this month. The Bank of England cut interest rates in August, but there is uncertainty about when the next reduction will be. The chancellor's October Budget, with tax rises rumored, could change the public's mood and impact the economy further.
In conclusion, the UK economy appears to be chugging along, with little sign that consumers are significantly cutting back. However, the upcoming Budget and rising costs could potentially shake this stability.
