UK retail sales volumes declined in July 2026 as weaker demand across non-food stores and online retailers reversed some of the gains recorded during the previous month, raising concerns that pressure on household finances could weigh on consumer spending in the months ahead.
Overall retail sales volumes fell 0.5% month on month, matching market expectations and marking the first monthly decline since April.
Core retail sales, which exclude automotive fuel, performed more poorly, dropping 0.9% compared with forecasts for a 0.5% decline.
Clothing sales hit by promotions and hot weather
Non-food sales volumes fell 1.3% during July, with clothing retailers among the weakest performers.
Clothing sales dropped 2.7% month on month as promotions encouraged consumers to bring purchases forward into June. Ashley Webb, senior UK economist at Capital Economics, also pointed to unusually hot weather as a factor reducing footfall during July.
Department stores were affected by problems with stock availability, while household goods retailers experienced a slowdown following strong sales during May and June. Furniture demand also weakened after the previous period had benefited from heatwave-related spending.
Food stores performed better, with sales volumes increasing 0.5% during the month as the World Cup and unusually warm weather supported demand. However, this was insufficient to offset the broader weakness in non-food categories.
“Britain’s summer spending spree cooled in July, but the past quarter offered some welcome respite to battered retailers,” said James Bentley, director at Financial Markets Online. “Over the three months to July, sales rose in all retail sectors except fuel. With fuel prices still elevated by the conflict in the Gulf, drivers are cutting back on journeys and deliberately filling up less.”
Three-month retail performance remains stronger
Despite July’s monthly decline, the broader three-month trend remained relatively resilient.
Total retail sales volumes increased 1.1% during the three months to July compared with the three months ending in April. Sales were also 1.6% above their July 2025 level and reached their second-highest point since April 2022.
Bentley said overall sales volumes during the three-month period were 3% higher than a year earlier, describing the performance as “robust.”
Consumer confidence reaches two-year high
Separate consumer confidence figures offered a more encouraging signal, with the GfK index rising to a two-year high of -14 in August from -17 in July.
Capital Economics believes the improvement could contribute to annual retail spending growth accelerating from 1.6% in July to approximately 3% in August.
Webb cautioned, however, that with CPI inflation and unemployment still expected to rise further, any improvement in consumer spending could prove temporary.
Capital Economics continues to forecast growth in overall consumer spending of just 0.7% during 2026.
“The question now is whether the summer surge will fade as quickly as Britons’ suntans,” Bentley said. “Inflation ticked up in July and last month’s dip in spending could presage a wider loss of momentum.”
Online sales retreat after June increase
Online retail sales values fell 3.9% in July compared with June, reversing the previous month’s 2.5% increase.
Despite the monthly decline, online sales remained 6.5% higher than in July 2025.
The proportion of total retail spending conducted online also decreased, falling to 28.3% in July from 29.2% in June.
The figures leave the UK retail sector with a mixed outlook: spending remains stronger over the broader three-month period, but July’s decline and continued inflationary pressure suggest household demand could lose momentum as the year progresses.
Leave a Reply