Retail sales dip in July after two-month summer boost

Retail sales volumes dipped 0.5% in July 2026 after two consecutive months of increases in May and June when retailers brought promotions forward for early heatwaves and the World Cup.

While food retail volumes were steady with a 0.5% increase, compared to an average of 0.6% over the past three months, clothing, household goods and department stores all suffered a fall in volumes in July, according to ONS figures released this morning.

“July’s monthly fall looks less like a collapse in demand, but more of a timing effect of the heatwave and previous promotions pulled forward into June,” explained McKinsey associate partner Hai-Ly Nguyen.

While the heatwave suppressed high street footfall and big-ticket household purchases such as furniture, the final week of the World Cup helped buoy food and drinks sales’ July performance.

But the third month of high temperatures also meant that many consumers had already spent much of their budget for summer goods, Deloitte retail partner Cande Cooper noted.

“After a positive couple of months of sales growth, volumes softened in July as some of the ‘easy wins’ ran out for retailers. Consumers have not stopped spending, but the boosts from weather, events and summer demand are now fading,” she said.

“Retailers now have to work harder to win discretionary spend from value-conscious consumers as many are being much more selective about where they spend their hard-earned cash - increasingly choosing convenience, value and experiences over a trip to the high street.”

This will make for a “challenging” environment for retailers over the months ahead, according to BRC lead economist Harvir Dhillon.

Rising bills will squeeze consumers further at a time when high operating costs have made it harder for retailers to absorb cost increases, he added.

“If the government is serious about delivering growth while keeping the cost of living under control, it must reduce the cost of doing business. This means tackling the growing burden of business rates, packaging taxes and employment costs.”