UK retail sales dip in July on fashion slump - BDO survey

London – 06 August 2017: British shops saw a dip in sales last month, with fashion retailers enduring their worst July for eight years, a survey showed on Friday, adding to evidence consumers are cutting back spending on discretionary items.

Britain's economy has slowed as the rise in inflation since last year's Brexit vote and modest pay growth have squeezed consumers' real earnings. The Bank of England cut its growth forecast on Thursday.

Accountancy and business advisory firm BDO said its monthly High Street Sales Tracker found overall like-for-like store sales fell 0.6 percent in July, having risen 1.3 percent in June.

It highlighted a 3.5 percent fall in fashion sales.

“While June’s sunshine demonstrated that the sun can whet consumer appetite for shopping, poor weather at the end of July combined with consumers starting to feel the pinch took its toll on fashion last month," said Sophie Michael, head of retail and wholesale at BDO.

"It is apparent that shoppers are diverting their attention to essentials and tightening their belts ... The results imply that the road ahead may be even more challenging than expected."

The BDO survey contradicts data last week from the Confederation of British Industry which showed retail sales growth hit a three-month high in July.

Recent reports from retailers themselves have been mixed.

This week clothing retailer Next (NXT.L) reported better-than-expected second quarter trading, while department store John Lewis [JLP.UL] said its first half sales rose 1.6 percent.

The British Retail Consortium will publish its July sales report on Aug. 8, while official data will be released on Aug. 17.