Retail sales in Great Britain experienced a sharper-than-expected decline in June, dropping by 1.2% as households tightened their spending amidst adverse weather conditions, election uncertainties, and the ongoing cost-of-living crisis. This decline followed a 2.9% increase in May and was steeper than the anticipated 0.4% drop.

According to the Office for National Statistics (ONS), department stores, clothing retailers, and furniture outlets were major contributors to the downturn. ONS chief economist Grant Fitzner noted that retail sales retreated from May’s peak, with most retail sectors, except for petrol stations, showing declines.

Sales volumes in food stores fell by 1.1%, primarily due to reduced activity at supermarkets. Retailers attributed this decline to poor weather and ongoing economic difficulties, which have deterred spending as households continue to face high living costs. Despite inflation easing back to the government’s 2% target, prices remain substantially higher than they were three years ago.

Non-food stores saw a 2.1% drop in sales volumes. The Office for National Statistics (ONS) noted that election uncertainty, adverse weather, and reduced foot traffic contributed to the decline in this sector.

The British Retail Consortium reported that some electronic categories performed better, as consumers replaced items purchased during the Covid lockdowns and upgraded home entertainment systems for events such as Euro 2024, Wimbledon, and the Olympics. Additionally, books saw increased sales as people prepared for their holidays.

Lisa Hooker, PwC UK’s leader of industry for consumer markets, commented that while July began with unseasonably cool and wet weather, retailers are hopeful that improved weather, political stability, and England’s sporting achievements will boost consumer spending. However, this may come too late to significantly impact summer sales for some retailers.

The figures coincide with the Bank of England’s deliberation on whether to lower interest rates from the current 5.25%, the first potential reduction since the onset of the Covid pandemic, amid concerns that high borrowing costs are impacting the economy.

The Bank of England is scheduled to hold its next policy meeting on August 1. Financial markets expect that the central bank will maintain current interest rates, following reports that core inflation in the service sector exceeded forecasts in June.