Delta variant drags on UK retail sales in July
By Alexander Bueso
Date: Friday 20 Aug 2021
(Sharecast News) - Retail sales fell sharply last month as the Delta wave of Covid-19 led Britons to steer clear of shops and hold onto the excess savings amassed during the pandemic.
According to the Office for National Statistics, in July total retail sales in the UK fell at a month-on-month pace of 2.5% (consensus: 0.5%).
That left the annual rate of increase at 2.4%, down from 9.2% (consensus: 6.0%).
Non-food retail sales accounted for the bulk of the decline, dropping by 4.4% on the month, although they remained 0.4% above their February 2020 mark.
Food sales meanwhile shrank by 1.5% versus June, having been boosted by the Euro 2020 football tournament during the prior month, but were 4.9% above their comparable year-earlier level.
Commenting on the latest ONS data, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the evidence was "mixed" regarding whether household outlays had recovered in July.
On the positive side of things, footfall during the week ending on 14 August was only 18% below its levels of 2019.
However, Bank of England data pointed to a bit of softness in the value of credit and debit card transactions, alongside a reticence by some households to spend due to Covid-19 related uncertainty and for financial reasons.
"Looking ahead, retail sales probably will simply flatline over the six months," Tombs added
"Households face a combination of the withdrawal of fiscal support and much higher inflation in Q4, which will offset the boost to real disposable incomes from rising employment."
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