A rise in spending on cinema blockbusters and holiday flights struggled to brighten the worst July on record for year-on-year growth in total retail sales.
Total consumer spending grew by a modest 1.7% in July, boosted by high ticket sales for films including Toy Story 4 and The Lion King, according to Barclaycard’s latest consumer spending report.
Airline expenditure bounced back from three consecutive months of decline to grow by 3.7%.
But the figures represented a decline in real terms when accounting for inflation.
And according to the BRC (British Retail Consortium)-KPMG retail sales monitor, sales edged up by just 0.3% year-on-year in July, compared with an increase of 1.6% in July 2018,
The Barclaycard data revealed that spending on essential items contracted by 0.9%, as 0.7% less was spent at supermarkets and spending declined by 2.4% at petrol pumps.
However, consumers spent more on non-essential items, which saw growth accelerate to 2.4% as it was bolstered by demand for entertainment and leisure during the summer.
There was a significant uplift for the UK’s embattled dining sector, as restaurants saw a 10.1% increase in sales as they were buoyed by warmer weather, and pubs were up 5.6%.
However, retail spending continued to struggle. Esme Harwood, director at Barclaycard, said: “Spending has remained relatively subdued over the past few months, with an underlying uncertainty about the wider economic and political landscape causing many to hold off making purchases on bigger ticket items.
“However, on a brighter note, box office hits such as The Lion King and Toy Story 4 have helped boost spending as consumers continue to prioritise dining out and enjoying trips to the cinema and theatre this summer.”
The BRC-KPMG survey revealed it was the lowest year-on-year growth figure recorded for the month of July since the records started in 1995 – and also follows the worst June on the index’s records.
Total retail sales had declined year-on-year in both May and June.
Paul Martin, UK head of retail at KPMG said: “While any growth is welcome after two months of decline, it’s clear that most players need more than sunshine to get back on their feet.”
On a like-for-like basis, UK retail sales edged up by 0.1% from July 2018. This was an improvement compared with recent averages, the index said.
Online sales of non-food products showed weaker growth in July than a year ago.
Helen Dickinson, chief executive of the BRC said: “While retailers will welcome the return to growth, it has nonetheless been a punishing few months for the industry.
“The combination of slow real wage growth and Brexit uncertainty has left consumer spending languishing with the 12-month average total sales falling to a new low of just 0.5%.
“A coherent strategy for retail is needed. The Government should freeze future business rates rises and fix the appeals system before embarking on a wholesale reform of this broken tax system.”
