UK retail sales rose 2.5% year on year (YOY) in July according to the latest figures from the British Retail Consortium (BRC) and KPMG. However, sales growth at this level will not be enough to offset rising costs creating the potential for further job losses and store closures.

During the four weeks from 6 July to 2 August 2025 food sales climbed 3.9% YOY, up from 3.3% in July 2024, boosted earlier in the month by key sporting events and multiple heat waves. Non-food sales rose 1.4%, marking a turnaround from the 1.8% decline recorded a year earlier.

In-store non-food sales saw a 1.9% increase, recovering from last year’s 3% drop, while online non-food sales grew just 0.3%, matching last year’s modest rise. Online penetration for non-food fell to 34.8% from 35.1% a year earlier, continuing a gradual shift back towards physical retail.

However, Helen Dickinson, Chief Executive of the BRC, said the early July momentum faltered as the month progressed.

“Food sales did well in early July thanks to warm weather and a packed sporting schedule, though this momentum failed to hold for the rest of the month. Rising food inflation meant increased spending was more a result of higher prices than improved demand. Fashion sold well early in the month, but deteriorated as weather worsened, while homeware and indoor furniture grew steadily, recovering from the previous year’s decline. Gaming and toys sold particularly well, as nostalgic adults purchased products like Lego.”

Helen Dickinson, Chief Executive, BRC

Dickinson warned that sales growth is still “barely touching the sides” when it comes to covering the £7 billion in new costs imposed on retailers in the last Budget. She cautioned that any further taxation in the upcoming Autumn Budget could force retailers to make “difficult choices about the future of shops and jobs,” driving prices higher and leaving more families struggling, particularly those on lower incomes.

Linda Ellett, UK Head of Consumer, Retail & Leisure at KPMG, said July’s warm weather – the UK’s fifth warmest on record according to the Met Office – gave a lift to home appliances and food and drink sales. However, she noted that inflation remains a driving factor in spending. “Monthly non-food sales are only growing at around 1% on average at present,” she said. “With employment costs having risen and inflation a pressure for both businesses and consumers, it remains a challenging trading environment for many retailers.”

Ellett added that while most consumers surveyed by KPMG remain confident in managing their household budgets, big-ticket purchases are being made more cautiously in light of rising essential costs. “Holidays are the priority for many this summer, but those heading away have had to account for higher travel costs,” she said. “Consequently, spending in some areas of the retail sector remains subdued and competition for consumer spend will remain fierce.”

Sarah Bradbury, CEO of IGD, said shopper confidence in July fell to zero for the first time since April, reflecting the cooling weather despite a boost from Wimbledon and the Lionesses’ victory. “More households are feeling the pinch, yet trust in the industry rose by three points,” she noted, pointing to ongoing resilience in the food sector despite inflationary pressures.