Fears of spending cuts hit retail sales

The British Retail Consortium (BRC) said retail sales grew 0.5 per cent on a like-for-like basis in July – a steep fall from the 1.2 per cent increase in June and the worst reading since April.

Non-food sales were the worst affected, with cautious shoppers shunning so-called big-ticket items and homewares, said the BRC.

Its latest BRC-KPMG Retail Sales Monitor showed sales of home accessories and house textiles fell back below a year earlier and suffered the largest decline since spring 2009.

Furniture and flooring sales also tumbled year on year as consumers chose to put off large home improvement projects.

Food sales growth picked up, but this was largely flattered by a smaller gain a year earlier, said the BRC.

Stephen Robertson, director general of the BRC, said: "Talk of public spending cuts is unsettling customers and they are concentrating on essentials.

"It's clear the recovery continues to need support."

Internet, mail order and phone sales also slowed in July to 11.3 per cent year-on-year growth in what marked the weakest performance for almost a year.

Helen Dickinson, head of retail at KPMG, said it was encouraging to see sales continue to grow, but cautioned of further fallout from austerity measures.

"Spending at least continues to hold up and is likely to continue to do so, at least until the effects of Government measures begin to hit people's pockets," she said.

The cooler weather at the end of last month and the end of the World Cup boost also acted as a drag on retail sales.

TV sales had boomed in the months before and during the football tournament, but slowed markedly in July.

However, clearance and promotions helped to drive clothing sales, which picked up after only marginal growth in June, added the BRC.