British retail sales slip in July after World Cup boost in June

British retail sales fell slightly in July, reversing a strong June that was fueled by hot weather and the World Cup, official data revealed on Friday. Volume sales in the month dropped 0.5% compared to June, matching economists' forecasts. However, annual sales growth slowed to 1.6%, down from an earlier estimate of 3.8%, slightly below expectations of a decline to 2.2%.

Clothing and footwear sales experienced the steepest decline since May 2025, falling 2.7% on the month after many stores ran summer sales in June rather than July. Sterling remained relatively stable against the dollar following the release of the figures. Retail experts suggest the July figures represent a pause rather than the beginning of a consumer downturn, citing robust consumer sentiment despite rising energy costs from the US-Israeli conflict.

The government's decision to remove VAT from electricity bills from October is expected to boost demand later in the year. GfK's consumer confidence indicator reached a two-year high in August, its highest since shortly after the previous Labour leader Keir Starmer's appointment. However, retailers like JD Sports and Next have reported mixed fortunes, with JD Sports issuing a profit warning due to weaker US markets.