The British Retail Consortium (BRC) has reported that the return to growth seen by retail sales was driven by an increase in food purchases.

Food sales increased 2.6% year-on-year over the three months to July, against a growth of 8.4% in July 2023. This was below the 12-month average growth of 5.3%, and for the month of July food was in growth year-on-year.

UK total retail sales increased by 0.5% year-on-year in July, against a growth of 1.5% in July 2023. This was above the three-month average growth of 0.3% and below the 12-month average growth of 1.4%.

Sarah Bradbury, CEO of the Institute of Grocery Distribution (IGD), said: “Shopper confidence rose nine points in the days immediately after the election, while England’s success at the Euros inspired a nine-point increase in focus on quality. Although, they have both fallen back in line since. Further good news comes from July’s volumes which were higher than they were last year, marking three consecutive months of year-on-year volume growth for the grocery market.

“Grocery sales in July were higher than last year, with sales particularly strong in the final two weeks of the month, undoubtedly helped by the mini heatwave the UK enjoyed at the time which saw the hottest day of the year recorded so far.”

Bradbury continued: “While the new Government sets expectations around change taking time, shoppers are adjusting their outlook. As Labour lay out their plans for the years ahead, we expect to see further divergence in experience.

“An August heatwave and GB’s successes at the Olympics are likely to cause a short-term uplift in confidence and therefore more trade-up opportunities as we’ve previously seen at the Euros. This would continue a three-month trend of continued growth for grocery, as spurred on by the weather.”

Retailers look for the reform of business rates system

Helen Dickinson OBE, chief executive of BRC, said: “Retail sales returned to growth, driven by an increase in food purchases.

“Now that election uncertainty is over and Government is rolling out plans to kickstart economic growth, retailers are planning their own investment strategies. Many will be looking to the Autumn Budget, keen to see an end to business rates rises under the new Labour Government.

“They will also be looking for any details of the reform of the whole business rates system, promised in Labour’s manifesto.”