World Cup to blame for drop in retail sales growth to three-year low

 

Retail sales grew at their slowest pace for over three years in June, with a variety of factors including England’s early exit from the World Cup being blamed for shoppers keeping a tight grip on their purses.

 

Total sales were up just 0.6 per cent compared to the same month last year, the British Retail Consortium (BRC) said this morning. Ignoring months during which the annual comparisons are distorted by Easter, this was the most sluggish growth recorded since May 2011. On a like-for-like basis, which excludes new stores and added shop floor space, sales were down 0.8 per cent.

 

Yet retailers will be hoping the figure is just a blip, with the three-month average printing a more respectable annual growth rate of 2.6 per cent for total sales, and 1.1 per cent for like-for-like sales.

 

The BRC recommends observing the three-month average as a way of ironing out monthly fluctuations.

 

However, food sales remain low even according to the quarterly data. Like-for-like food sales were down two per cent during April to June, compared to a year earlier, while total sales were up just 0.1 per cent.

 

Strong discounting in supermarkets has been cited as one factor weighing down on the value of sales.

 

“Sales in the food sector struggled, with England’s early exit from the World Cup exacerbating the grocers’ problems,” said David McCorquodale of KPMG, which helps compile the research. “The price war continues to take a heavy toll on the profitability of the sector, which saw sales decline in value again this month.”

 

Howard Archer of IHS Global Insight agreed. “The BRC has already revealed that the year-on-year drop in its shop price deflator widened to a record 1.8 per cent in June,” he said, adding that weak retail sales could hit the UK’s second quarter GDP reading.

 

The findings mirror a separate survey published last month by the CBI, which showed annual retail sales growth slowing unexpectedly to a seven-month low in June.