Economists put a dampener on record retail sales figures for July

By Tim Wallace and Lizzy Burton RETAIL sales climbed to record highs in July as shoppers spent with a vengeance after months of lockdown – but economists warned of a hard road ahead before recovery is guaranteed.

Families spent 3pc more last month than they did in February before the pandemic struck, according to the Office for National Statistics (ONS). Sales surged due to pent-up demand and improved household finances, as consumers paid down debts and stacked up savings through lockdown.

Meanwhile, private sector output grew at the fastest rate in almost seven years in August, according to IHS Markit’s closely watched purchasing managers’ index. The survey score rose from 57.1 in July to 60.3 in August, well above the 50 mark that separates contraction from growth.

However, economists warned that the rebound is not certain to last. They said it could be derailed by a second wave of Covid, tax hikes, or a winter surge in job losses when the taxpayerfunded furlough scheme ends.

The retail sales figures include spending at physical and online stores. They exclude pub and restaurant spending, as well as holidays.

Lynda Petherick, of Accenture, said: “July marked another month of progress for the retail sector and an important symbolic milestone as sales climbed above pre-pandemic levels.

“Nevertheless, the dark cloud hanging over retail remains the threat of further local or national lockdowns, which would wreak havoc on a sector navigating the road to recovery.”

Samuel Tombs, at Pantheon Macroeconomics, said the July figures are likely to mark this year’s sales peak.

Household goods such as DIY materials are particularly popular, with sales 6pc above pre-pandemic levels as bored families seek to do up their homes. Britons appeared more confident about going to shops, leading to a 7pc fall in online sales compared with June, although this still leaves online volumes 50pc higher than February.

Sales of clothes jumped almost 12pc on the month, but were still a quarter lower than they were post-covid.