Reuters: British retail sales washed out by rain in July

British retail sales fell more sharply than expected in July as heavy rain put off shoppers who are also feeling the hit from high inflation and 14 back-to-back increases in interest rates.

Official data showed sales volumes last month were 1.2% lower than in June.

Economists polled by Reuters had forecast that sales volumes would fall by 0.5% on the month.

Sterling weakened against the U.S. dollar and the euro as investors assessed how much the bigger-than-expected sales drop represented a warning sign of a slowdown in the economy, beyond the weather effect.

Retail sales volumes were 3.2% lower than a year earlier, the Office for National Statistics said. That compared with economists' forecasts for a 2.1% decline.

"Retail sales fell sharply in July as poor weather impacted most sectors," ONS Deputy Director for Surveys and Economic Indicators Heather Bovill said

"It was a particularly bad month for supermarkets as the summer washout combined with the increased cost of living meant sluggish sales for both clothing and food. Department store and household goods sales also dropped significantly."

Many shoppers went online rather than venture out into the rain with 27.4% of retail sales taking place via the internet, up from 26.0% in June and the highest share since February 2022.

Food stores sales volumes fell by a monthly 2.6% while non-food stores sales volumes fell by 1.7%.

As well as the unpredictability of Britain's weather, consumers have been hit by high inflation which stood at almost 7% last month, down from a peak of about 11% last October but still the highest among the world's large rich economies.

However, July's data represented only the second time that sales volumes fell on a month-to-month basis so far in 2023, suggesting some resilience in consumer demand.

(Reporting by William Schomberg and William James; Editing by Kate Holton)