British retail sales volumes fell 0.5% in July, missing economists' forecasts of a 0.4% decline and reversing a revised 0.7% gain in June. Clothing and footwear retailers bore the brunt, with sales dropping 2.7% — the steepest monthly fall since May 2025 — while non-store retailers and household goods stores also posted declines.
Despite the monthly dip, sales volumes rose 1.1% over the three months to July, and consumer confidence improved to -14 from -17 in June. Office for National Statistics chief economist Grant Fitzner noted that hot weather and promotions lifted sales of outdoor products and fans, though food sales edged up just 0.5%.
The broader economy showed mixed signals: public sector borrowing reached £1.8bn in July against expectations of zero, and total public debt stood at 94% of GDP. PwC UK's Jacqueline Windsor said higher inflation and energy costs reduced discretionary spending, while the Item Club's Matt Swannell expects inflation to hit 3.5% by year-end.