Food retailers endure biggest slump since records began

Food retailers suffered their worst trading for nearly a quarter of a century in June but the launch of early summer discounting across the high street helped the retail sector as a whole bounce back to register growth of 0.7 per cent.

The dire food figures confirm what analysts and grocery chief executives have been saying since the start of this year: that the squeeze on consumer spending – partly driven by sky-high petrol prices – has resulted in the toughest trading conditions for at least 30 years.

The Office for National Statistics said the volume of sales at food shops fell by 0.2 per cent between May and June and by a whopping 4.2 per cent on the same month in 2010, which was "the largest fall on record since the [monthly] series began in 1988". Within the food figures, the impact of price inflation – estimated by ONS at 5.8 per cent in June – is clear. While volumes were down sharply in June, sales by value rose by 1.3 per cent over the year.

Rob Harbron, an economist at the Centre for Economics and Business Research, said: "Food stores were again hit hard and provided the largest downward pressure to growth."

Overall, however, a frenzy of discounting helped the wider retail sector to grow sales volumes by 0.7 per cent in June on the previous month, compared with a City forecast of a 0.6 per cent rise. While sales volumes bounced back from a monthly fall of 1.3 per cent in May, the picture remains of anaemic trading and retailers battling for every penny of consumer spend.

All general merchandise sub-sectors grew sales volumes last month, suggesting that the widespread discounting drove money through the tills, although its impact on profit margins is unlikely to be pretty. Of these categories, household good stores were the top performer, delivering sales volumes up by 2.6 per cent between May and June, with non-specialised stores posting growth of 1.5 per cent.

Mark Hudson, the retail and consumer leader at the accountants PricewaterhouseCoopers, said: "The ONS figures out today show that despite a small recovery in June, the retail market remains flat and subdued, suppressed by consumers reining in their spending. They are offsetting price inflation by buying less and shopping smarter – using the internet more to research prices, using promotions and waiting for sales."

The pressure the internet is putting on high street chains without a transactional website was laid bare by non-store retailers growing sales volumes by 24.4 per cent in June on last year – the highest ever recorded by ONS.

Mr Hudson said: "The slight recovery in June seems to be promotion driven. Lower early-season volumes meant retailers went on sale earlier than usual, and they are staying on sale."

Start your day with The Independent, sign up for daily news emails
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tvPoldark episode 8, review
News
news
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions