The latest ONS retail sales figures show volumes were down by 0.5% in July, driven by non-store retailing (down 3.6%), clothing and footwear (down 2.7%), and household goods (down 1.9%).

Jacqui Baker, Partner and Head of Retail at RSM UK said: “Retail was not a World Cup winner, with many opting to cheer on England from the pub and prioritising their summer getaway, boosting hospitality and travel rather than retail sales. Consumers splashed out on fans and food for barbeques due to the heatwave, with many avoiding soaring temperatures on the high street.

“Individuals are still being extremely selective about where they choose to spend. Consumers are continuing to prioritise value and remain particularly cautious around big-ticket items, so there are clear winners and losers in retail rather than increases across the board.

“That said, consumers will spend if there’s a compelling enough reason or occasion. The challenge for retailers is not simply capturing more consumer spend, but understanding what is driving it. With consumer confidence increasing to its highest in two years, the hope is that the boost to retail returns as people slowly start to feel more optimistic.

“However, this may be short-lived as consumers’ discretionary income comes under renewed pressure due to higher fuel prices and food inflation this autumn.”

Thomas Pugh, chief economist at RSM UK, added: “Retail sales falling in July suggests that the weather may have prompted consumers to stay inside or switch spending towards hospitality given England’s World Cup run.

“Looking through the dip in July, we see little sign that consumers are curtailing spending in response to the conflict in the Middle East. Retail sales have averaged 0.3% m/m so far this year, compared to 0.1% in 2025. What’s more, consumer confidence rose to a two-year high in August, suggesting that consumers remain unfazed about renewed tensions in Iran and the risk of another tax raising Budget in the autumn.”

"Admittedly, the big test for consumers is yet to come. Rebounding oil prices have caused fuel prices to rise a little and based on current energy prices, utility bills will rise again in October. At the same time, the labour market remains weak and pay growth is slowing, especially in the private sector, which mean real incomes are likely to stagnate in the second half of the year. That creates a much tougher backdrop for consumer spending in H2. However, households have so far been unbothered by higher energy prices, and the savings ratio is high which means households still have room to spend a bit more despite elevated inflation.”

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