UK retail sales growth slows in July, non-food sales fall

British retail sales grew at a slower pace in July, data

published on Tuesday showed, as shoppers cut back on non-essential

spending and budgeted for the higher price of food following the Brexit

vote.

UK retail sales increased by an annual 0.9

percent on a like-for-like basis, which strips out changes in store

size, the British Retail Consortium (BRC) said.

That was down from a 1.2-percent growth in June - the highest non-Easter reading of the year thanks to good weather.

Total sales in July slowed to show a 1.4-percent rise, in line with the 12-month average.

(British people are budgeting for the higher price of food following Brexit vote. /AFP Photo)

While

better than the falling sales seen in much of this year, July's reading

was a latest sign that the engine of the British economy - consumer

spending - is losing steam.

The BRC said the 2.3

percent growth in food sales on a like-for-like basis between May and

July was mainly driven by rising prices, while non-food sales shrank by

0.7 percent.

This was the weakest performance for both since the January-March period.

A

sharp depreciation in sterling since the Brexit vote in June 2016,

combined with stagnant wages, has put pressure on households as

essentials like food have become more costly.

The

trend has pushed consumer borrowing up while confidence levels have

fallen along with spending on items like cars and the number of people

seeking mortgages to buy homes.

(Consumers in the UK have been feeling the impact of sharply higher inflation and weak wage growth. /AFP Photo)

"We

can expect food to continue making the running for sales growth for the

time being, although driven more by price than volume, with non-food

continuing to struggle," said Helen Dickinson, Chief Executive of the

BRC.

Competition was heating up for the diminishing

pool of discretionary consumer spending power, Dickinson said. As well

as food, homeware and footwear were among the sectors to have won last

month.

Paul Martin, UK head of retail at accountancy

firm KPMG, which sponsors the index, said the figures seemed to defy

weak readings of consumer confidence recently, retailers should not

count on a sustained pickup.

"This divide suggests

that UK shopping patterns remain mixed, although with demand continuing

to be weak, retailers would be wise to remain cautious," he said.