20 August 2021
Commenting on the July ONS retail sales data, which show a sharp drop of 2.5 per cent in July, Jacqui Baker, partner and head of retail at RSM, said:
‘Despite a surge of shoppers hitting the high street on Freedom Day, footfall was down in July with the ‘pingdemic’ hampering retail sales - keeping consumers at home and leaving some retailers too short-staffed to open the doors. Throw in some unseasonal weather and uncertainty around a fourth coronavirus wave as new cases hit the highest level since January 2021; and it’s no surprise that consumer confidence was knocked.
‘The sharp drop in retail sales was driven by a fall in non-food sales of 4.4 per cent despite summer sales and discounting as retailers looked to offload summer stock before the Autumn/Winter season kicks in.
‘August is normally a slow month due to holidays, but this year retailers will be hoping that the thriving staycation market and changes to self-isolation rules for the double jabbed will drive an unseasonal peak in sales to aid the post-pandemic recovery.’
Thomas Pugh, UK economist at RSM, added: ‘The weakness in retail sales in July combined with a near 10 per cent month on month drop in seasonally adjusted car sales, marks a poor start to consumer spending in Q3. Indeed, the surge in COVID-19 cases and the ‘pingdemic’ means that overall GDP growth probably slowed sharply from the 1.0 per cent month on month gain registered in June. However, overall consumer spending probably held up better in July as consumers switched spending towards services; and card payments picked up sharply at the start of August suggesting that this is just a bump in the recovery road rather than a detour.’