UK retail sales growth slowed in July as the increasing gap between consumer price inflation and wage rises continued to squeeze household spending.
Data published by the British Retail Consortium (BRC) late on Monday night, showed retail sales increased by an annual 0.9% on a like-for-like basis. This measures sales growth in stores already open at least year.
This was down from June's rise of 1.2%, but beat forecasts of growth of just 0.6%.
Total sales slowed to 1.4% in July, down from 1.9% in the same month a year ago, but the BRC said this was in line with the 12-month average.
Slowing non-food sales
Signs that Britain's spending spree was starting to lose steam were provided in three-month average data that showed between May-July spending on non-food items decreased by 0.7% - below the 12-month average of 0.4% growth.
Online sales showed similar deteriorating growth. Spending on non-food goods rose by 8.3% in July, compared with 11.2% in July 2016. Average online sales over May-July rose 7.8%, less than the 12-month average of 8.4%.
Food sales slowed less sharply from last month, and three-month average sales showed stronger growth than in the same period a year ago.
The 1.2% rise in sales in June was helped by a month of sunshine that helped high-street footfall - indeed, it was second-warmest June on record that helped drive sales in non-food categories such as clothing and leisure.
By mid-July, wet, dull and windy weather prevailed and likely had the cooling effect on sales seen in the data.
"After June’s heatwave, retail sales growth cooled a little in July as the weather became more unsettled and food inflation eased slightly," said Joanne Denney-Finch, chief executive at the Institute of Grocery Distribution (IGD).
Spending power eroded
Retail experts also noted the likely impact of the growing squeeze on consumer spending from the combined effects of higher consumer price inflation (CPI) and low wage growth.
CPI currently stands at an annual rate of 2.6%, while annual average wages are increasing at just 1.8%.
Helen Dickinson, chief executive of the BRC, said: "The month’s growth was underpinned by food sales alone, while non- food sales relapsed into negative territory as the competition heats up over a shrinking pool of discretionary consumer spending power."
In early trade in London, the FTSE 100 eased 0.1% and most retailers were adding downward pressure on the benchmark.
Among them, Next, the clothing retailer, fell 1.4%, rival Burberry Group eased 0.7%, while supermarket J Sainsbury lost 1.1%.