UK retail sales grew by just 1.3 per cent year on year in July, a clear step down from the 2.5 per cent recorded a year earlier and the softest reading in months, according to the BRC-KPMG Retail Sales Monitor published on Tuesday. The figure sat below the twelve-month average of 1.8 per cent and offered the first hard read on how British households are spending as the second half of the year begins.
The headline number concealed a sharp divide. Food sales rose 3.8 per cent, ahead of their twelve-month average of 3.4 per cent and only fractionally below the 3.9 per cent posted in July 2025. Non-food sales went the other way, falling 0.7 per cent against growth of 1.4 per cent a year earlier and pulling the total lower. It was the food aisle, in other words, that kept the overall figure in positive territory.
The weather did the work
Much of the split traces back to a single variable: the heat. A prolonged run of warm weather, coupled with England’s progress in the World Cup, drove spending on food and drink as households entertained at home rather than on the high street. Barbecues, garden gatherings and match-day gatherings all favour the supermarket over the shopping centre, and the July numbers show it.
Non-food felt the same weather from the other side. Shoppers avoided the heat of the high street, and physical stores bore the brunt. Where non-food demand did hold up, it moved online and towards a narrow band of categories. Clothing was a relative bright spot, helped by demand for affordable summer essentials, and shoppers still reached for small indulgences such as beauty products and fashion jewellery. Bigger-ticket purchases were the casualty: items like furniture and computing, the sort of spending that signals confidence about the months ahead, were held back.
That pattern matters more than the headline growth rate. It is the clearest sign yet that households are willing to keep filling the trolley while postponing anything that can wait. Essentials get front-loaded; discretion gets deferred.
A cautious message from the industry
Helen Dickinson, chief executive of the British Retail Consortium, struck a downbeat note on the second half of the year. “Consumer demand has struggled in the heat, leaving retailers facing a challenging start to the second half of the year,” she said. “Household budgets remain stretched, consumer confidence is fragile, and retailers continue to grapple with rising operating costs.”
That last point is doing quiet work. Retailers are absorbing higher wage and tax costs at the same time as demand softens, a squeeze that limits how much they can discount their way to volume without eroding margins. A 1.3 per cent value increase, set against still-positive food price inflation, implies that the underlying volume of goods leaving the shelves grew barely at all, if at all.
Linda Ellett, KPMG UK’s head of consumer, retail and leisure, pointed to the same discretionary caution from the industry side, noting that while clothing and lower-value treats found buyers, shoppers continued to delay the larger, considered purchases that tend to accompany a genuine recovery in confidence. The read across both sets of commentary is consistent: this was a month carried by necessity, not by any renewed appetite to spend.
The consumer-carries-H2 question
The July print lands squarely in a debate that has run through the City all summer. With business investment subdued and government spending constrained, much of the case for a firmer second half rests on the consumer keeping British demand ticking over. That case now looks harder to make.
The BRC-KPMG monitor is a value measure, not a volume one, and it captures only its member retailers rather than the whole market, so it is a directional signal rather than the final word. But directionally it points one way. Growth is decelerating, the composition is defensive, and the part of the basket that reflects optimism is shrinking. A consumer front-loading food while cutting back on sofas and laptops is not a consumer about to power a recovery.
The official read will follow shortly. The Office for National Statistics publishes its Retail Sales Index for July, a volume-based measure that tends to move in the same direction as the BRC series if not always the same magnitude, on 21 August. Economists will be watching whether the official data confirms the stall the industry survey now describes.
What it means for rates
The soft print also feeds the interest rate argument, though carefully. The Bank of England held Bank Rate at 3.75 per cent at its most recent meeting, with a wing of the Monetary Policy Committee still leaning towards a firmer stance on inflation. Weak discretionary spending is the kind of data that strengthens the case for eventual cuts, by pointing to an economy where demand is cooling and price pressure from the consumer is fading.
It is not, on its own, enough to force the Committee’s hand. Food prices are still rising, services inflation has proved sticky, and one month of survey data will not settle an argument that turns on the labour market and wages. The MPC has not moved, and nothing in the July retail figures obliges it to. What the numbers do is tilt the balance of evidence a little further towards the doves, and give the argument for a September or autumn move a firmer footing than it had a month ago.
For now, the July monitor tells a simple story. British shoppers spent on what they needed, held back on what they wanted, and left the retail sector heading into the autumn with thinner momentum than it would like.
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