Commenting on the Office of National Statistics retail sales index for July 2025

Commenting on the Office of National Statistics retail sales index for July 2025, Kien Tan, Senior Retail Adviser at PwC, said:

“Today’s delayed data release from the ONS found that headline retail sales volumes excluding petrol grew by 1.3% in July compared with the same month last year, which translates to a 2.7% cash increase in retailers’ tills after accounting for price inflation.

“While July’s year-on-year sales growth was similar to June’s number and an improvement on May, sales growth has fallen back materially since March and April, confirming that consumer spending had indeed been pulled forward by the warm weather earlier in the Spring. Overall retail sales volumes have now been below pre-pandemic levels for three years, suggesting that consumer demand has yet to recover despite the population growth over the last five years.

“July was notably weaker for supermarket sales volumes, not helped by the highest grocery price inflation in a year-and-a-half. With food and drink prices increasing by almost 5% compared with last year, shoppers continue to put fewer items in their trolleys, and are increasingly wary of spending in other categories too.

“The main bright spot for the sector was fashion, with sales volumes increasing by 5.5%, the highest growth since January 2023. This was helped by early July heatwaves continuing to encourage Spring-Summer season’s clothing sales at the same time as new Autumn-Winter ranges launching just as the weather cooled.

“Online sales also did well, with the proportion of retail sales online increasing from 27.5% in July to 27.8% in July, as early July heatwaves discouraged shoppers from venturing onto high streets.

“Despite those bright spots, it's clear that the momentum in retail spending is slowing, with sales in the second quarter of 2025 below that of the first quarter by 0.6% in volume terms and by 0.2% on a cash basis, once the later timing of Easter has been factored into calculations. So, despite the slight improvement in confidence we found in our latest consumer sentiment survey conducted in July, it seems shoppers are beginning to hold back on spending, no doubt partly as a result of rising inflation, particularly in key categories like food and drink.

“With inflation likely to rise before it falls in the Autumn, retailers will be hoping that continued price increases do not weigh on shoppers’ spending plans as the critical run-up to Christmas approaches.”