Retail sales in Scotland during July 2023 increased by 4.6% compared to the same month in 2022, according to data from the Scottish Retail Consortium (SRC) and KPMG.

However, this growth falls short of both the three-month average increase of 9.1% and the 12-month average growth of 8.5%.

Unfavourable weather conditions played a significant role in impacting sales. The heavy rain throughout July resulted in a substantial hit to the sales of summer food and clothing ranges.

Despite the 9.1% increase in food sales compared to July of the previous year, this growth was below the three-month average of 13.9% and the 12-month average of 12.5%.

Non-food sales likewise only increased by 0.9% in July 2023, marking a decline from the 3.7% rise during the same period in 2022.

Challenges ahead due to inflation and interest rates

The SRC cautioned that the combination of high inflation and interest rates presents a dual burden that could lead to further disappointing sales in the near future.

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This concern arises as a significant portion of sales growth could be attributed to rising prices rather than increased consumer activity.

Adjusted for inflation, the year-on-year decline of all retail sales in July 2023 was 3%, signalling the tangible impact of economic pressures on consumer spending.

Economic experts reflect on sales dynamics

Ewan MacDonald Russell, deputy head at the SRC, commented on the downward trend in sales. He noted that the “miserable economic news” coupled with unfavourable weather had a significant impact on retail establishments.

Real-term sales experienced a sharp drop of 3%, a notable reversal from positive figures in June 2023, driven by the influence of inflation on retail volumes.

Paul Martin from KPMG also emphasised the impact of the damp and blustery weather on shoppers’ behaviour, resulting in more conservative spending.

While total sales managed a modest 4.6% growth, home goods outperformed due to the inclement weather. But clothing categories faced negative sales trends due to reduced interest in restocking summer wardrobes.