The strong retail sales rise reported by the ONS for July met with a downbeat reaction in the City as analysts cautioned that it is still too early to call an end to the downturn.
Retail sales volumes in July were 3.3% higher than last year and sales values grew by 2.6%. Much of the increase came from food retailers – which generated revenues 5.2 per cent higher than
in July last year – but the non-food retailing and repair sector led the way with a 10.8% increase.
Singer analyst Matthew McEachran said that the overall picture was being affected by various factors having changed since last year, such as soft comparatives. He added: “We’ve got seasonal factors such as staycations and changes in currency. Generally things are better than people feared earlier in the year, but whether or not this persists we don’t know.”
Nomura analyst Christopher Walker said the data remained “mixed” and that although John Lewis’s July numbers suggested an improvement in big-ticket sales, this could, in part, be accounted for by “easing comparatives” and “an element of discounting.”
He said that clothing sales, which were strong in July, remained volatile and that in spite of stock controls and cost-cutting, the retail sector as a whole looks unlikely to outperform in the short term.
Walker noted that the present trend of retail parks performing better than high streets was evidence that shoppers are opting for big rather than small retailers.