CONSUMERS are making do with what they have and spending less on non-essentials like fashion and furniture, forcing the sharpest drop in retail sales for more than 20 years.
Sales volumes plunged by 3.9 per cent last month compared to May, with underlying growth slowing to a two-year low of 2.2 per cent.
Worst hit were clothing, footwear and textile shops, where sales fell by 6.9 per cent, while household goods store
s – such as furniture and electricals – were down by 5 per cent.
The underlying growth in their sales slowed to less than 1 per cent – the lowest for two years.
Retail experts said the latest evidence of the economic slowdown showed consumers were putting off larger purchases such as clothing and carpets to maintain spending on essentials such as food.
Economists said the cut in spending would ease pressure on the Bank of England to raise interest rates to curb inflation.
The figures, from the government's Office for National Statistics (ONS), show month-on-month sales dropped in June by the largest amount since records began in 1986.
This was partially attributed to a unusually wet June following an unexpected 3.6 per cent sales rise in sunny May. However, the year-on-year figure showed underlying growth had slowed.
Professor Paul Freathy, the director of the Institute for Retail Studies at Stirling University, said when money was tight, spending on non-essentials was shelved. He said: "The proportion of disposable incomes used for mortgages and rent has increased over the last 15 years, so many people are already quite stretched.
"After other essentials like travel costs, their next priority is food, which is now costing more, so that puts luxury and more expensive items further and further down the list.
"People are now leaving things like carpets longer before replacing them, and often only buying clothes they need. They may also trade down to discount clothing retailers like Primark."
The British Retail Consortium said the ONS's figures were in line with its own statistics, published last week.
Richard Dodd, its spokesman, said: "A lot of clothing spending is on fashion items rather than essentials, so there is plenty of scope for cutting back when times are tough.
"People are also postponing or cancelling purchases of more expensive goods such as furniture, carpets and large electrical goods."
Minutes from the Bank's monetary policy committee's meeting this month showed Tim Besley, one of its members, voted unsuccessfully for interest rates to be increased.
Vicky Redwood of Capital Economics said: "The sales figures will provide at least some reassurance that weaker consumer demand will prevent retailers from passing on their sharp rises in costs – reducing the chances that Tim Besley will muster a majority for a rise next month."
The full article contains 472 words and appears in The Scotsman newspaper.
