Retail sales fall despite World Cup and hot weather boosting alcohol and drinks trade – business live | Business - New Zealand News Beep

Introduction: Retail sales fall despite World Cup and hot weather boosting drinks trade

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Retail sales fell in July after a bumper period the previous month, despite the World Cup luring and the hot weather boosting alcoholic drink sales in supermarkets.

The total volume of goods sold in stores and online fell 0.5% in July, according to the Office for National Statistics (ONS), compared with a 1% rise in June.

The drop was partly down to non-food sales dropping back in July, after British retailers had brought promotions forward to June because of the hot weather. The ONS said there was “evidence of reduced promotions in July” among household goods and clothing retailers.

But shops selling alcoholic drinks and beverages “performed well, which they attributed to promotions, the hot weather, and the World Cup,” it said.

ONS chief economist Grant Fitzner said:

double quotation markRetail sales increased in the latest three months, with all main sectors, apart from motor fuel, seeing growth.

Some retailers told us that hot weather and promotions helped sales of outdoor products and items such as fans, with clothing and online sports merchandise also doing well.

The figures come after UK consumer confidence jumped to a two-year high last month, according to a closely followed monitor. That is despite tensions in Iran flaring up again and a jump in energy bills last month making a dent in consumer finances.

GfK’s Consumer ⁠Confidence Index rose to -14 from -17 in July, but with inflation rising again and ongoing uncertainty in the Middle East, “there ‌are still many challenges ahead that will test the mettle of UK consumers,” said Neil Bellamy, consumer insights director at GfK.

Elsewhere, oil prices were at one-month highs amid the ongoing deadlock between the US and Iran. Brent crude was at $93.42 a barrel, 0.38% down for the day but still trading higher than at the start of the week.

Asian share ⁠indices were mixed on Friday as stress in global bond markets showed little sign of abating. Japan’s Nikkei index was down 0.53%, although South Korea’s Kospi was up 0.87% and Hong Kong’s Hang Seng was up 0.92%.

The agenda

7am BST: ONS retail sales data

7am BST: ONS public finances

9am BST: Flash PMI eurozone

9.30am BST: UK flash PMI

2.45pm BST: US flash PMI

Updated at 03.21 EDT

Key events

Returning briefly to July’s retail sales figures, and there is some disagreement among the experts over whether the World Cup was good or bad for retailers.

Of course there is no doubt that it was a big boost for publicans, who enjoyed the best football-related uplift of recent years, of £150m.

But did that translate to shops too? If you tried visiting a corner shop before an England match then you might assume so – but Jacqui Baker, head of retail at the consultancy RSM UK, thinks otherwise:

double quotation markRetail was not a World Cup winner, with many opting to cheer on England from the pub and prioritising their summer getaway, boosting hospitality and travel rather than retail sales.”

On the other hand Justin Parr, the chief credit officer at trade finance provider Treyd, said:

double quotation markFor half the month England were in the knockout stages of the World Cup. In a football-mad nation, that always helps to support sales, particularly for retailers of food and drink and clothing.”

And even the ONS itself, in its data release this morning, said food stores enjoyed rising sales volumes, which retailers “attributed to both the weather and the World Cup”.

Experts are urging caution on public spending after this morning’s public finances data, which was worse than expected.

Elliott Christensen, a senior economist at the Resolution Foundation think tank, said:

double quotation markStronger growth in the first half of the year contributed to strong tax receipts in July. But it has failed to deliver a wider public finances windfall as the economic impact of conflict in the Middle East has taken its toll on borrowing costs.

The Chancellor’s margin against his fiscal rules is now razor thin, with the healthy headroom of around £24 billion last spring likely to have fallen below £8bn. He should use his first Budget to put the public finances on a firmer footing and ensure that any new policy announcements are fully funded.

July data showed total public debt was £2.98tn, or 94% of GDP – up £96bn on a year earlier.

The graph below shows what that looks like in the context of the last two years.

UK public sector net borrowing from July 2024 to July 2026 (£bn) Photograph: ONS

Meanwhile, Henning Diederichs, the director for public sector at the Institute of Chartered Accountants in England and Wales (ICAEW), said the latest figures will make it “challenging for the Chancellor to both increase public spending significantly and stay within the government’s existing fiscal rules”.

Updated at 03.36 EDT

The FTSE 100 has opened slightly up, helped by strength in mining stocks and banks.

The blue-chip index was up 0.1% at 10,760 points in early trading, with miners Fresnillo, Antofagasta, Endeavour, Anglo American and Glencore all among the top risers.

Meanwhile, the pound was also slightly up against the US dollar, rising 0.12% at $1.364.

ShareUK reports unexpected deficit of £1.8bn as John Healey prepares for first budgetHeather StewartJohn Healey in Downing Street Photograph: Phil Lewis/SOPA Images/Shutterstock

Elsewhere, official data shows that the UK government ran a larger than expected £1.8bn deficit in July.

The figures underline the challenges facing the chancellor, John Healey, as he draws up his first budget.

City economists had expected a shortfall of zero for July, a month when Treasury receipts tend to be swollen by self-assessment income tax payments.

However, the Office for National Statistics said despite strong tax receipts, public sector borrowing last month was £1.8bn.

In the first four months of this financial year, the cumulative deficit was £56.7bn – lower than last year but still running £2.3bn ahead of the Office for Budget Responsibility forecast.

Total public debt was £2.98tn, or 94% of GDP – up £96bn on a year earlier – in line with Labour’s plan to borrow for investment in infrastructure projects.

Healey said:

double quotation markFiscal discipline is the bedrock of our UK economic stability and national security, which is why we are committed to meeting our fiscal rules, with a buffer against global uncertainties.

We are cutting the deficit faster than any other G7 economy, while giving people a bit of breathing space with cost of living pressures and focusing support to get young people into work.

Updated at 02.58 EDT

Despite the monthly fall, the ONS said, sales volumes still rose for the three months to July (the darker of the two lines), boosted by stronger showings earlier in the summer.

Sales volumes fell back over the month but rose over the three months to July 2026 Photograph: Office for National StatisticsShare

Updated at 03.37 EDT

The retail sales data suggests that previous resilience among British consumers in the face of war and rising energy prices may be dropping off slightly, experts said.

Even with the World Cup boosting the early part of the month, some have suggested that the hot weather may have (understandably) deterred shoppers from venturing outside, despite earlier reports to the contrary…

Sandra Prince, head of consumer at Lloyds, said:

double quotation markAfter an extended spell of warm weather across large parts of the UK, many households will already have bought what they need for the season, while lines of popular summer products come to an end.

The boost from the World Cup that came to an end in the first half of July also meant fewer opportunities to capitalise on the warmer conditions.

Even so, the picture is unlikely to be uniform. Hotter days could have shifted footfall and spending online or towards retail parks.

For retailers, as the summer peak slows down, attention is now turning to the opportunities the autumn could bring to keep consumers engaged.

Andrew Hunter, senior economist at Moody’s Analytics, added:

double quotation markThe 0.5% fall in U.K. retail sales in July suggests the resilience of consumer spending over the first half of the year is fading. The weakness may partly reflect a temporary drag from the exceptionally hot weather, which the ONS notes reduced footfall in many stores.

But alongside the continued boost from the World Cup, warm temperatures are also reported to have helped sales in other retailers, notably supermarkets.

The July fall follows a run of strong monthly gains and the sharp rise in consumer confidence suggests renewed strength could lie in store, with the GfK index surging again in August to its highest level in two years.

That said, the full impact of the jump in energy prices is only now feeding through to households and, with the labour market still struggling and rising inflation eroding real incomes, we expect retail sales growth to slow over the second half of 2026.