Grocery sales up but concerns rise over faltering confidence

A warning of signs of consumer confidence faltering in the wake of the Brexit vote came today despite Scotland's food retail sector last month seeing its first increase in sales since December.

Grocery shopping sales are up but concerns over consumer confidence in Scotland remains. Picture: Phil Wilkinson

Grocery sales were up 0.1 per cent in June compared with the same month in 2015, according to the Scottish Retail Consortium(SRC)/KPMG Scottish Retail Sales Monitor. As well as being the first growth since December it is only the third time sales have increased in the last two years.

But the rise was offset by a decline in non-food sales, which dropped by 2.6 per cent compared to June 2015.

Overall, sales decreased by 1.4 per cent in June compared with the same month the previous year. Adjusted for deflation, sales increased by 0.6 per cent in real terms.

The figures come as retailers are warned to be prepared for the impact of Brexit amid early indications of a dip in consumer confidence.

David McCorquodale, head of retail at KPMG, said that despite the rise in June, the food retail market “continues to face challenges and we can’t yet fully predict how the cost impact of leaving the EU will trickle down to the consumer”.

“Where we have already seen an impact is on the rising cost of family holidays abroad. As a result, we expect to see retailers try to benefit from staycations and overseas tourists in the short term.”

He added: “June also saw high-street retailers, once again, fall victim to inclement weather. One thing for certain is that regardless of the weather forecast, the retail sector should be braced for further change and uncertainty as the politicians begin the process of brokering a new deal with Europe.”

Ewan MacDonald-Russell, of the SRC, added that there were “signs that customer confidence may have faltered since 23 June”.

Inflation figures for June out yesterday showed it rose to a higher-than-expected 0.5 per cent after fuel prices increased and the Euro 2016 football tournament drove up air fares.

Chris Williamson, of IHS Markit, said inflation was likely to breach the Bank of England’s 2 per cent target next year, “possibly by some margin”. But he said policymakers were expected to “look through” any rise in inflation, focusing instead on shoring up economic growth. “Interest-rate cuts and non-standard measures such as additional asset purchases are therefore widely expected to be seen when the MPC next meets in August,” he said.

Meanwhile Scottish recruitment agency Search yesterday said businesses were starting to deal with the aftermath of the referendum by appointing heavy-hitting “chief Brexit officers” to six-figure roles.