UK retail sales growth slowed sharply during the final two weeks of July as cautious consumers pulled back on discretionary spending.
Total like-for-like sales across fashion, lifestyle and homeware rose 2.7 per cent compared with July 2025, according to BDO’s latest High Street Sales Tracker.
However, BDO said growth was only slightly above inflation, indicating that the volume of goods sold increased marginally year on year.
In-store sales climbed 3.8 per cent, marking their strongest performance since January, although the figure was measured against growth of just 0.8 per cent in July last year.
The monthly result was largely driven by a strong start, with high street sales growth slowing to just 0.09 per cent during the final week.
Online trading followed a similar pattern and fell into negative territory at the end of the month, with like-for-like ecommerce sales down 0.07 per cent in the final week.
BDO warns of challenging trading environment
BDO head of retail and wholesale Sophie Michael said July had been “a month of two halves”, with the positive momentum recorded during the opening fortnight disappearing by the end of the period.
She said: “We typically see some volatility in like-for-like sales across July, with the school holidays impacting retail sales over the summer, but retailers may have been taken aback at just how steep the decline in sales has been over the past couple of weeks.”
Michael suggested that unusually warm weather earlier in the summer may have encouraged shoppers to refresh their wardrobes sooner than usual, reducing demand later in the season.
She added that uncertainty surrounding interest rates, energy costs and the government’s forthcoming Budget continued to weigh on consumer confidence and non-essential spending.
“With consumer spending remaining subdued and households continuing to prioritise essential purchases over discretionary items, retailers face a particularly challenging trading environment,” Michael said.
BDO warned retailers would need to manage stock levels carefully and protect cash flow while adapting to changing customer demand ahead of the crucial festive trading period.
Michael added that the coming months were likely to be decisive for the health of the UK retail sector following an inconsistent first half of the year.
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