July could be ‘lull before the storm’ for retailers and consumers

theguardian.com:

July could be the “lull before the storm” for retailers and consumers after the heatwave boosted sales of summer clothing, picnic treats and electric fans despite the intensifying cost of living crisis, experts have warned.

Figures from the British Retail Consortium (BRC) revealed a 2.3% sales rise last month compared with a 6.4% rise the year before.

The latest BRC-KPMG sales monitor found the sales growth was largely caused by inflation, which is at more than 9%, and masked a larger drop in the number of items sold.

Helen Dickinson, the chief executive of the BRC said the summer was “an incredibly difficult trading period”.

“Consumer confidence remains weak, and the rise in interest rates coupled with talk of recession will do little to improve the situation,” she said.

“The Bank of England now expects inflation to reach over 13% in October when energy bills rise again, further tightening the screws on struggling households. This means that both consumers and retailers are in for a rocky road throughout the rest of 2022.”

Some experts expect rising inflation to lead to a recession that could last into next year and hit millions of the most vulnerable households, especially in the worst-off parts of the country.

The Bank of England last week forecast inflation could exceed 13% by the end of the year – its highest since 1980 – plunging Britain into recession.

Spending on clothing and other non-essentials has held up so far this year as the warm weather and the opportunity to enjoy long-delayed overseas holidays and big family events, especially weddings, has been underpinned by savings made by many during the pandemic lockdowns.

However, Paul Martin, the UK head of retail at the advisory firm KPMG, said: “The summer could be