UK Retail Sales Rise 2.5% in July Amid Cost Pressures

UK retail sales rose by 2.5% year-on-year in July 2025, boosted by warmer weather and major sporting events such as England’s Euros football success and the British & Irish Lions rugby tour. Food sales increased notably by 3.9%, driven more by rising inflation than increased demand, while non-food sales also improved, particularly in-store, reversing previous declines. Despite this growth, retailers warn that the gains barely offset the £7 billion in new costs introduced at the last Budget, including higher national minimum wages, and caution that further tax hikes in the upcoming Autumn Budget could force shop closures, job losses, and higher prices. Consumer confidence in personal finances remained steady, but optimism about the wider UK economy fell to its lowest level since January 2025. Discretionary spending rose modestly, supported by events such as live shows and concerts, while essential spending slightly declined. Retailers and analysts emphasize ongoing economic uncertainty, inflation pressures, and operational costs as significant risks to sustained retail growth and broader economic stability.