The monthly decline was the fourth to hit retailers in the past five months and was all the worse because of soft comparisons against the previous July, which was one of the wettest on record.
Following the bleak BRC data, the City expects little let-up for retailers in the coming months. Citi analyst Edward Wright believes that, excluding food, retail sales were down about 6 per cent. “It seems the ability of the consumer to rein in spending is far outweighing short-term weather trends,” he said. “As comparatives toughen this autumn, we fear for further negative headline trends.”
Food was the only sector to experience growth in July, but that performance was in the context of food price inflation and soft comparatives last year.
Pali International analyst Nick Bubb said: “Poor weather in August is helping department stores, such John Lewis, but is not much use to anyone else. We expect more weakness in August retail sales and then a very tough September.”
Kaupthing analyst Matthew McEachran said that recent rallies in share prices “looked premature and unjustified” because spending is likely to be pinched further in the autumn.
Clothing and footwear again fell year on year, the BRC reported, although childrenswear and clearance lines performed well. The deteriorating housing market and cautious consumers hit the homewares market hardest. The leisure sector suffered one of the toughest comparatives because of strong book sales in the equivalent period last year after the launch of the last Harry Potter book.
Computer games and consoles continued to make gains, but were limited by supplies rather than weakening demand.
BRC director-general Stephen Robertson said: “Frivolous shopping is off the agenda as most customers concentrate on value and durability and there are few signs the slowdown has bottomed out yet.”