UK retail sales rose by 2.5 per cent Y-o-Y in July 2025 accompanied by a strong’ consumer card spending, particularly in clothing. However, industry leaders say, the growth ‘barely touches the sides’ of the £7 billion in new costs from the latest budget.
The uptick in UK retail sales was against the 0.5 per cent growth observed last July and the 12-month average growth of 1.9 per cent, according to British Retail Consortium (BRC)-KPMG data.
Helen Dickinson, CEO, BRC, says, with sales growth at these levels, it is barely touching the sides of covering the £7 billion new costs imposed on retailers at the last Budget.
If the upcoming Autumn Budget sees more taxes levied on retailers’ shoulders, many will be forced to make difficult choices about the future of shops and jobs, and ongoing pressure would push prices higher.
Ultimately, this means more families struggling, particularly those on lower incomes, reduced consumer spending and a drag on economic growth.
Separate figures from Barclays show, consumer card spending grew 1.4 per cent Y-o-Y in July 2025 up from a decline of 0.1 per cent in June 2025 - with discretionary spending up 2.4 per cent as changeable weather led shoppers to both sunny and rainy day activities and items.
Barclays found clothing performed strongly, rising by 4.2 per cent, while growth in online retail spending excluding groceries reached 4.9 per cent, up from 2.4 per cent in June, as shoppers made the most of discounted items and sales events including Prime Day.
However, confidence in the UK economy’s strength dipped once again in July, falling three points 22 per cent M-o-M to 22 per cent, the lowest level seen since January.
Karen Johnson, Head-Retail, Barclays, says, the summer sales, changeable weather and shoppers seeking the 'feel-good factor led' to a strong July for retailers, particularly among beauty, clothing and furniture stores.
While confidence in the UK economy remains subdued, prudent money management, supported by the growing popularity of AI tools to help with budgeting, is contributing to a continued resilience in personal and household finances, she adds.
