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Cost-of-living crisis turns a corner as retail sales rebound

Journalist: John Choong (Head of Markets and Research), Newspage

ended 16. August 2024

Retail sales in July rebounded after a wet June and election uncertainty caused consumers to pull back on spending. Retailers will be delighted as spending volumes are up 0.5% on last month. On a year-on-year basis, volumes are also up 1.4%. This marks the second-strongest month of annualised growth over the past 12 months, thereby showing that the cost-of-living crisis could be turning a corner.

Core retail sales (ex. fuel) had a decent showing, growing 0.7% from June, and 1.4% from the same time last year. This comes on the back of increased spending in areas such as department stores as well as other non-food stores. However, spending in discretionary areas such as clothing and footwear, as well as household items fail to lift off and may be a concern.

Nonetheless, both consumer and business confidence data have been showing increasing signs of optimism in recent months. As such, there might be a hint of optimism that August’s retail sales print may be more reflective of the windfall that many retailers have been clamouring for after a slow summer.

Newspage asked experts for their views, below.

5 responses from the Newspage community

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Wes Wilkes
CEO at IronMarket Wealth
More good news for team GB, well team UK, as retail sales jumped 0.5% in July led by a summer of sport from the Euros, Wimbledon and into the Olympics. Things also look more rosy on an annualised picture with a year on year increase of 1.4%. Bunch that together with yesterday’s positive GDP news and we could be looking at further positive growth news once Q3 is complete. The consumer seems to be putting those wage rises to good use and putting the cost-of-living crisis behind them.
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Michelle Lawson
Director at Lawson Financial
These bright new figures are a boost after what, overall, has been a drab summer. The figures don’t incorporate the effect of the recent base rate cut, so this is hopefully going to be the trend moving forward as British pockets are starting to feel replenished at last.
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Patricia McGirr
Founder at Repossession Rescue Network
Tempting though it might be, It’s not time to break out the bunting. Taken in isolation the latest ONS figures might give a glimmer of hope for U.K. Plc, but marginal improvements in spending will bring little comfort to many. Pensioners who’ve lost the winter fuel allowance, homeowners facing repossession, and those struggling with soaring rents aren’t likely to be feeling the warm breeze of an economic recovery.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Retail growth is certainly good to see, but we need this to be more consistent and sustained following a fall in June previously. Alongside the recent GDP growth, it looks like the economy has turned a corner, but it may be a while before any relief is actually felt by the general public.
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John Choong
Head of Equities and Markets at Interpretiv
After a soggy June filled with political jitters, the cost-of-living crisis may be becoming more of a bad memory than a present nightmare. Core retail sales showed gradual signs of life, as Brits are ditching their rain boots for sport shoes while drawing their umbrellas as they headed to department stores, as other non-food stores and department stores saw healthy increases in July. This shopping spree isn't just good news for retailers' tills, however. It's music to economists' ears as well. With consumer spending accounting for about 60% of GDP, this could foreshadow yet another decent quarter of economic growth in Q3, and suggests the UK economy is strutting its stuff on the global runway, especially after coming hot on the heels of a solid Q2 GDP print yesterday.