3 months ago • 2 mins
What’s going on here?
Data out on Friday showed that the bad British weather rained on the retail sector’s parade.
What does this mean?
The UK might be famous for its unpredictable weather, but Mother Nature seemed particularly moody this summer. After all, last month turned out to be more about raincoats than beachwear, ranking as the sixth wettest July on record. And that gloomy backdrop had shoppers rethinking their summer wardrobe updates – triggering a sharp drop in clothing store sales, despite inflation’s slight cooldown.
Food and department stores also felt the pinch, but those cooped-up consumers were good for one thing: online shopping. Thanks to events like Amazon Prime Day, online sales climbed 2.8% from June, hitting their highest proportion of overall sales since February last year. Mind you, though, even that uptick in virtual carts couldn’t offset the overall slide, and retail sales ultimately fell by 1.2% – the first time they’ve missed expectations in four months.
Why should I care?
The bigger picture: On the fence.
Forecasting whether this is a rain-induced blip or the start of a trend is like predicting British weather: tricky. On the one hand, elevated interest rates and waning consumer confidence suggest that shoppers might keep pulling back. But on the other hand, wage growth is set to keep outpacing inflation in the coming months – so consumers might actually have some extra cash to splash before long.
Zooming out: Baby-bust blues.
The UK’s baby-making hit a 20-year low last year – and if that continues, a shrinking workforce could lead to heftier taxes to keep everything ticking along, which is likely to dent economic growth in the long run. And sure, in an ideal world, a surge in productivity could turn things around. But let’s be real: we haven’t seen one of those in 15 years.
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