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UK Fashion Sales Improve in July as Deflationary Run Continues

The numbers are in, and Britain’s decision to break away from the EU has had no immediate effect on U.K. shopping patterns.

According to the BRC-KPMG retail sales monitor for July, the first full month of figures post-vote, total sales rose 1.9%—the strongest growth since January—and like-for-likes increased 1.1%.

“This month’s solid sales figures may come as a shock to some given the slew of early indicators suggesting that consumer activity was slowing in the wake of the referendum result. However, little has materially changed for most U.K. households in the wake of June 23, so it is not surprising to us that sales are simply responding to their normal underlying drivers,” said Helen Dickinson, chief executive of the British Retail Consortium (BRC), pointing out that a heavy month of promotions proved successful in appealing to bargain-hungry shoppers.

Indeed, the long stretch of deflation continued in July—albeit a slower rate than the 12-month average of 1.8%—as overall shop prices decreased 1.6%. However, it’s still too early to say if prices will start to creep back up. Mike Watkins, head of retailer and business insight at Nielsen, said discounting looks set to be a catalyst to stimulate demand in the coming months.

That being said, fashion sales improved as well-timed promotions, holiday preparations and a heatwave prompted shoppers to supplement their summer wardrobes. At the same time, online sales of non-food products echoed the performance of total sales, growing 11.2% in July, driven by a positive performance in women’s clothing and accessories.

“Warmer weather helped blow away some of the post-referendum blues, boosting the U.K. feel-good factor and giving consumers a sense that ‘life goes on’ following the initial shock of the Brexit vote,” said David McCorquodale, head of retail at KPMG. “For retailers, plans to improve productivity remain top of mind to guard against recent increases to their cost base as well as making sure they can weather what are likely to be more uncertain times ahead.”