Retail sales fall further as shoppers feel the squeeze

The high street suffered falling sales again in June and retailers remain under "huge pressure" from the squeeze on consumer spending, an influential survey has warned.

However, price cuts and early clearance sales helped most non-food retailers, notably those selling small-ticket homewares, deliver an improved performance last month. This meant the overall trading picture was not bad as it could have been after a spate of recent high-profile retail administrations.

Like-for-like sales fell by 0.6 per cent in June on the same month last year, said the British Retail Consortium and KPMG monthly survey, an improvement on the 2.1 per cent slump in May.

While total retail sales rose by 1.5 per cent last month, these figures were massaged by the rise in VAT to 20 per cent in January, wider shop price inflation and the impact of new stores and extensions. Stephen Robertson, the director general of the BRC, said: "Sales continue to be under huge pressure from the squeeze on disposable incomes produced by rising inflation and low wage growth."

He added: "These figures are not as bad as they could have been but it shows just how tough times are when total sales growth of 1.5 per cent is regarded as not that bad."

Food sales growth slowed further in June and low consumer confidence again hit sales of big-ticket items, such as furniture, kitchens and bathrooms.

But all general merchandise sectors – except women's clothing and footwear – posted a "modest improvement", as clearance sales tempted consumers to purchase less expensive products, such as home textiles and accessories.

Helen Dickinson, the head of retail at KPMG, said: "We are certainly not out of the woods yet, as highlighted very starkly with the demise of a number of well-known brands during the course of June."

Retailers, including Jane Norman, TJ Hughes and Homeform – the group behind Moben Kitchens, Sharps Bedrooms and Dolphin Bathrooms – collapsed last month. Ms Dickinson said: "Other than in food, many retailers continue to seek to reduce capacity through store closures."

Tomorrow, Marks & Spencer is expected to buck the recent gloom by posting a 1.5 per cent rise in UK like-for-like sales for the 13 weeks to 2 July.

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