British retail sales soften in July after June World Cup boost

British retail sales experienced a decline in July, following a significant increase in June, as a result of favorable weather conditions and promotional activities tied to the ongoing men’s soccer World Cup, according to official data released on Friday. The retail sales volumes for the month decreased by 0.5% compared to June, aligning with the median forecast of economists polled by Reuters.

Furthermore, the annual growth rate of retail sales slowed down to 1.6% in July, contrasting with a previously revised upward revision of 3.8%, which was slightly lower than expectations of a 2.2% decline.

Despite the softened retail sales, consumer sentiment surveys indicate a resilient demand, partially attributed to the surge in energy costs sparked by the ongoing U.S.-Iran conflict. This factor has been beneficial for the new Prime Minister, Andy Burnham, who has been striving to address voter concerns about the rising cost of living since assuming office in July.

GfK's long-standing confidence indicator, published earlier on Friday, reached a two-year high in August, marking its peak since shortly after Burnham's predecessor, Keir Starmer, took office. Retail sales updates from prominent British companies have shown a mix of outcomes. Clothing retailer Next has increased its annual profit outlook for the third consecutive time this year, attributing its sales growth to the prolonged period of hot weather prevailing in the country.

Conversely, sportswear and fashion retailer JD Sports issued a profit warning; however, this was primarily due to weakness in U.S. markets rather than domestic performance in Britain.