Warm weather boosts UK consumer spending in June, data shows

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Warm weather boosted UK consumer spending on clothing, in pubs and at outdoor retailers last month, but overall retail sales growth remained below the pace of inflation, according to data published on Tuesday.

The value of retail sales rose an annual rate of 4.9 per cent in June, a stronger reading than the average of 4.6 per cent in the three months to June and above the 12-month average of 4 per cent, figures from trade body the British Retail Consortium and advisory firm KPMG showed.

These growth rates were, however, lower than the rate of price increases, which stands at 8.7 per cent, indicating that sales fell in volume terms.

BRC chief executive Helen Dickinson said that although “consumer confidence remains fragile”, last month’s “hot weather prompted purchases of summer essentials” such as swimwear. “Outdoor games, garden furniture and barbecue food were boosted as families came together to celebrate Father’s Day,” she added.

The BRC and KPMG data chimes with separate figures released on Tuesday by payments company Barclays, which monitors almost half of UK credit and debit card transactions.

They showed that consumer card spending grew at an annual rate of 5.4 per cent in June, compared with 3.6 per cent in May.

Esme Harwood, a director at Barclays, said Britons had in June got “into the swing of summer, bringing a welcome boost to several sun-starved categories”. She pointed out that pubs and bars benefited from more people visiting beer gardens, while spending jumped at butchers and garden centres thanks to the “arrival of barbecue season”.

Harwood added that even clothing retailers, which have struggled since the onset of the cost of living crisis, had returned to growth as consumers took advantage of hotter weather to refresh their wardrobes.

Barclays said spending on clothing increased by an annual rate of 4 per cent in June, the highest growth in almost a year, while the pharmacy, health and beauty sector received its biggest boost since January, with spending up 6.8 per cent.

Spending at pubs, bars and clubs meanwhile rose 8.4 per cent, the largest increase since the start of this year.

However, both data sets showed the annual rate of growth in retail sales continued to lag behind the rate of inflation, a trend seen since mid-2021 when headline price rises began to surge. This indicates that consumers are paying more but getting less for their money.

Economists and markets expect the Bank of England to raise interest rates from a 15-year high of 5 per cent now to 6.5 per cent by February next year in a continued push to reduce stubbornly high inflation.

Will Hobbs, chief investment officer at Barclays UK Wealth Management, said the UK remained “in a precarious spot” because of high inflation and rising borrowing costs.

“Difficult quarters lie ahead as the surge in interest rates continues to put pressure on household cash flows,” he said.