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UK retail sales fell back again in June, falling 0.1% month-on-month as consumers bought fewer items at higher prices, according to the Office of National Statistics.

Retail value sales were up 1.3% month-on-month despite the volume drop, driven by inflation.

On a year-on-year basis retail volumes were down 5.8% in June while value sales were up 4.4%, reflecting implied price inflation of 9.9%.

Sales volumes remain 2.2% above their pre-coronavirus) February 2020 levels.

The ONS said that non-store retailing (predominantly online retailers) sales volumes fell by 3.7% in June 2022; sales volumes were 20.8% above their February 2020 levels.

Automotive fuel sales volumes fell by 4.3% in June 2022 with retailers suggesting the fall was linked to record-high petrol and diesel prices impacting the amount of fuel people were buying.

Food sales volumes rose by 3.1% with retailers confirming that increased sales were because of Queen’s Jubilee celebrations.

Supermarkets’ sales volumes rose 3.1% over the month, alongside an increase in specialist food stores (such as butchers and bakers) of 0.8%, and alcohol and tobacco stores, which rose by 3.5%. Despite the pickup in June, food sales volumes have followed a downward trend since summer 2021 following the lifting of restrictions on hospitality.

In recent months prior to June 2022, grocery retailers have highlighted that they are seeing a decline in volumes sold because of increased food prices and cost of living impacts.

Non-food stores sales volumes fell by 0.7% over the month because of falls in clothing stores (negative 4.7%) and household goods stores (negative 3.7%), such as furniture stores.

The proportion of retail sales online fell to 25.3% in June, its lowest proportion since March 2020 (22.8%), continuing a broad downward trend since its peak in February 2021 (37.4%).

Morning update

Consumer confidence remains at historic lows, according to the monthly Consumer Confidence Index from GfK amid soaring inflation.

The index remained at -41 in June,

The index measuring changes in personal finances over the last 12 months stayed the same at -23, which is 22 points worse than July 2021. For personal finances over the next 12 months, the index rebounded by to points to -26, albeit this remains 37 points down year-on-year.

The measure for the general economic situation of the country during the last 12 months is down one point at -66, now some 23 points lower than in July 2021.

Expectations for the economy over the next year stayed the same at -57, which remains is 52 points lower than July 2021.

Joe Staton, Client Strategy Director, GfK says: “Consumer confidence remains severely depressed this month as the impact of soaring food and fuel prices and rising interest rates continues to darken the financial mood of the nation.

“Despite a two-point uptick in our hopes for our personal financial situation for the next 12 months, which might reflect optimism over imminent change at the top of the UK government, the overall index languishes at a historic low amid acute concerns for the general economic situation.

“Against this financial backdrop, the UK electorate is looking for a new leadership with a commitment to unleashing growth, tackling inflation and cutting taxation. The successful candidate will need to deliver a much-needed shot in the economic arm of the country if they are to help improve consumer confidence.”

Meanwhile, the rising cost of living has forced UK consumer confidence to a record low of -19% in Q2 2022, according to Deloitte’s latest Consumer Tracker, as rising inflation and subsequent price increases tighten the squeeze on consumer spending power.

Consumers are most pessimistic about their household disposable income, with sentiment also dropping to an all-time low of -55% this quarter.

In addition, 62% of consumers are now spending more, compared to less than half (49%) this time last year. Of these, 86% say their increased spend is specifically due to higher prices.

Adjusted for the whole population, it means that the rising cost of living is now driving greater expenditure for more than half (53%) of all UK consumers.

Céline Fenech, consumer insight lead at Deloitte, commented: “With inflation going up faster than average earnings, there are now more consumers feeling the cost-of-living pinch than not. In a sign of the times, the biggest jump in spend this quarter is on energy and housing costs, including rent and mortgages.

“The current situation means consumers are significantly changing their spending behaviours to adapt. This might be by simply buying less, switching to cheaper brands or stores, and postponing major purchases. Some are also seeing an opportunity in reselling and purchasing second-hand goods.”

On the markets this morning, the FTSE 100 is up 0.2% to 7,281.8pts.

Risers include Naked Wines, up 2.6% to 160p, Kerry Group, up 2.4% to €97.94 and Bakkavor, up 1.4% to 84.2p.

Fallers include Parsley Box, down 5.3% to 17p, Nichols, down 4.5% to 1,210p and Fever-Tree, down 2.9% to 1,029p.

Yesterday in the City

The FTSE 100 edged up 0.1% yesterday to close at 7,270.5pts.

Ocado closed down 2.8% at 753.2p as it announced widening losses amid slowing retail growth in the first half.

Britvic was up 0.8% to 837.5p on a brief but positive trading update, while Marks & Spencer fell back 0.2% to 143.1p as it announced the departure of CFO Eoin Tonge to Associated British Foods.

Elsewhere, fallers included Deliveroo, down 1.7% to 96.4p, Naked Wines, down 1.6% to 155.9p and Science in Sport, down 1.5% to 32p.

Risers included Pets at Home, up 3% to 319p, Greggs, up 2.9% to 1,981p, Greencore, up 2.3% to 103.4p, C&C Group, up 2% to 194.9p and Devro, up 1.5% to 184.8p.