UK retail sales volumes fell by 0.5 per cent in July as a sharp decline in clothing purchases outweighed higher spending on drinks during the World Cup, official figures show.
The Office for National Statistics said the drop follows a 0.7 per cent rise in June, which was revised down from a previous estimate of 1 per cent.
The July contraction was larger than the 0.4 per cent decline expected by economists, marking the first monthly fall in sales for UK retailers in three months.
Non-food sales weakened after retailers brought forward summer promotions into June to take advantage of hot weather, leaving fewer discounts available in July, according to the statistical agency.
Sales of clothing and footwear slumped by 2.7 per cent last month, marking the steepest monthly fall since May of last year, while household goods fell 1.9 per cent.
The weakness in non-food categories more than offset a 0.5 per cent rise in food sales as warm weather continued to support supermarket spending.
Retailers selling alcoholic drinks also performed well due to heatwaves and the final stages of the World Cup, the Office for National Statistics noted.
Despite the monthly contraction, retail sales volumes increased by 1.1 per cent over the three months to July compared with the previous three months.
Quarterly growth and summer promotions
Grant Fitzner, chief economist at the Office for National Statistics, said: "Retail sales increased in the latest three months, with all main sectors, apart from motor fuel, seeing growth."
Fitzner added: "Some retailers told us that hot weather and promotions helped sales of outdoor products and items such as fans, with clothing and online sports merchandise also doing well."
Squeeze on household budgets
UK retailers have come under pressure in recent months as higher taxes and depressed consumer spending hit corporate bottom lines.
Jacqueline Windsor, head of retail at professional services firm PwC UK, said: "Higher inflation, notably the higher energy price cap and higher petrol prices later in the month, also meant less money in shoppers' pockets for discretionary spending outside of grocery and fuel."
Windsor noted: "Despite less promotional activity from online retailers, the high street failed to benefit as heatwaves continued to impact footfall."
Economic outlook and consumer sentiment
Matt Swannell, chief economic adviser to economic forecasting group the Item Club, warned of ongoing headwinds for the retail sector.
Swannell said: "The retail sector is likely to face a challenging H2 as households' real incomes come under further pressure."
Swannell added: "Inflation has already started to rise in July and we expect it to increase further over the next six months, reaching 3.5 per cent before year-end."
However, the closely watched GfK consumer confidence survey rose two points to -14, reaching its highest level in two years as households showed growing optimism about their personal finances.
