UK Spending Declines In July But Stronger Three-month Trend Offers Hope
- July sales reverse much of June’s gain - Underlying trend remains resilient - Hot weather and promotions lift key sectors - Improving confidence brightens outlook
LONDON – The Office for National Statistics reported UK retail sales last month, reversing much of June’s gain, although stronger three-month growth and improving consumer confidence offered some grounds for optimism.
Total retail sales fell 0.5% month on month in July, in line with expectations and down from June’s revised 0.7% rise. On an annual basis, sales grew 1.6%, missing the consensus estimate of 2.2% and slowing markedly from June’s downwardly revised 3.8% increase.
Retail sales excluding automotive fuel decreased 0.9% m/m, compared with an anticipated 0.5% fall and a 0.9% rise in June. In the 12 months to July, sales increased 2.3% -- a full percentage point below forecasts and more than three percentage points below the previous reading of 5.4%.
ONS statisticians caution that monthly growth rates can be volatile and prefer to focus on underlying figures, which provide a more stable picture of household consumption.
Stronger underlying growth
In the three months to July, sales rose 1.1% compared with the three months to April, with growth recorded across all main sectors except motor fuel.
ONS chief economist Grant Fitzner said retailers indicated that hot weather and promotions had boosted sales of outdoor products and items such as fans, while clothing and sporting goods also performed well.
“Food store sales were up as supermarkets benefited from a good July period, while retailers selling alcoholic drinks and beverages performed well, which they attributed to promotions, the hot weather, and the FIFA 2026 World Cup,” he said.
Non-food stores—which include department, clothing, household and other non-food retailers—recorded gains of 1.0% over the three-month period.
Fuel sales, however, declined in the three months to July compared with the three months to April. Many retailers reported that sales rose in July but had not recovered to pre-Middle East conflict levels.
Online sales increased across most sectors over the three-month period but declined across all sectors in July.
Improving sentiment
Forward-looking indicators point to a generally brighter outlook heading into autumn. Earlier in the day, GfK’s consumer confidence index improved to -14 in August from -17 in July, reaching a two-year high.
Meanwhile, the S&P Global Flash UK PMI survey showed that private-sector output expanded at its fastest pace since April. The composite index reached a four-month high of 52.5, up from 52.2 in July.
“The activity indices of August’s flash PMI survey suggest that the economy shrugged off the latest rebound in energy prices,” said Ruth Gregory of Capital Economics. “But with CPI inflation and unemployment yet to peak, we doubt any rebound in retail spending will last.”
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- July sales reverse much of June’s gain
- Underlying trend remains resilient
- Hot weather and promotions lift key sectors
- Improving confidence brightens outlook
By Harry Daniels
LiveSquawk News
@HarryDaniels71
14:00 GMT | 21 August 2026
LONDON – The Office for National Statistics reported UK retail sales last month, reversing much of June’s gain, although stronger three-month growth and improving consumer confidence offered some grounds for optimism.
Total retail sales fell 0.5% month on month in July, in line with expectations and down from June’s revised 0.7% rise. On an annual basis, sales grew 1.6%, missing the consensus estimate of 2.2% and slowing markedly from June’s downwardly revised 3.8% increase.
Retail sales excluding automotive fuel decreased 0.9% m/m, compared with an anticipated 0.5% fall and a 0.9% rise in June. In the 12 months to July, sales increased 2.3% -- a full percentage point below forecasts and more than three percentage points below the previous reading of 5.4%.
ONS statisticians caution that monthly growth rates can be volatile and prefer to focus on underlying figures, which provide a more stable picture of household consumption.
In the three months to July, sales rose 1.1% compared with the three months to April, with growth recorded across all main sectors except motor fuel.
ONS chief economist Grant Fitzner said retailers indicated that hot weather and promotions had boosted sales of outdoor products and items such as fans, while clothing and sporting goods also performed well.
“Food store sales were up as supermarkets benefited from a good July period, while retailers selling alcoholic drinks and beverages performed well, which they attributed to promotions, the hot weather, and the FIFA 2026 World Cup,” he said.
Non-food stores—which include department, clothing, household and other non-food retailers—recorded gains of 1.0% over the three-month period.
Fuel sales, however, declined in the three months to July compared with the three months to April. Many retailers reported that sales rose in July but had not recovered to pre-Middle East conflict levels.
Online sales increased across most sectors over the three-month period but declined across all sectors in July.
Forward-looking indicators point to a generally brighter outlook heading into autumn. Earlier in the day, GfK’s consumer confidence index improved to -14 in August from -17 in July, reaching a two-year high.
Meanwhile, the S&P Global Flash UK PMI survey showed that private-sector output expanded at its fastest pace since April. The composite index reached a four-month high of 52.5, up from 52.2 in July.
“The activity indices of August’s flash PMI survey suggest that the economy shrugged off the latest rebound in energy prices,” said Ruth Gregory of Capital Economics. “But with CPI inflation and unemployment yet to peak, we doubt any rebound in retail spending will last.”