Scottish retailers did a decent turn in June even though sales values were boosted by inflation, but there were continuing signs of caution among shoppers as prices continue to rise.

David Lonsdale, director of the Scottish Retail Consortium (SRC), described the group’s latest findings as a “sprightlier set of trading figures” but went on to warn that serious challenges remain in the months ahead in the form of weak footfall, soaring inflation and a “fitful” economy.

Apart from the top-line figure on total sales, the SRC data is not adjusted to factor out the effect of higher prices for goods. The latest on shop price inflation from the British Retail Consortium (BRC) shows that during June merchants raised prices at the fastest pace since 2008, up 3.1 per cent on a year earlier.

Total unadjusted sales rose by 4.4% compared to June 2021, when they surged by 38.6% with the re-opening of non-essential retail. Adjusted for inflation, the latest increase was 1.2%.

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Paul Martin, head of retail at KPMG, said the improvement on the previous year brought some “welcome rays of sunshine” but ultimately the impact of inflation means any growth was “paltry” and “doesn’t signify any true shift in gear for the Scottish economy”.

“As the cost-of-living crisis continues to deepen, retailers face walking a fine line between protecting margins and further denting consumer confidence by passing on price rises whilst negotiating with their suppliers to share the cost increases,” Mr Martin said.

“Cost and efficiency will dominate retailers’ agendas as they are forced to make some tough decisions on which products make it to the shelves in order to remain price competitive for consumers. With warmer summer weather predicted and many consumers choosing to holiday at home this year, retailers will be hoping that the feel-good factor begins to improve confidence amongst some shoppers – as presently overall confidence levels are lower than sales may suggest.”

The latest Scottish figures, covering the period from May 29 to July 2, benefited from the four-day bank holiday weekend to mark the Queen’s Jubilee celebrations. However, it also covered stretches of major railway disruption that dragged on shopper footfall in town centres.

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Total food sales increased by 2.7%, though this included June’s 5.6% surge in UK food prices, the largest increase since June 2011. Otherwise, food sales would have declined.

Total non-food sales rose by 5.8%. According to figures from the BRC, non-food prices across the UK rose by 1.9% in June, a touch slower than in May but close to record highs.

Mr Lonsdale of the SRC said the positive performance was driven by the return of socialising and special occasions such as weddings and graduations, with sales of more formalwear and dresses. Retailers also got a lift from spending on summer holiday mainstays such as sandals, swimwear and sunscreen.

“That said, there was further evidence of shopper caution as sales of larger ticket items such as furniture and electronic and electrical items were sluggish, despite further signs of improved stock availability on shop shelves,” he said.

“Whilst there more chipper results are pleasing the fact is one swallow does not make a summer. It will be a real challenge to sustain this improvement over the months ahead as retailers and consumers face into a multitude of headwinds including rising inflation, weak foot-traffic which will be exacerbated by further rail disruption, and a fitful economy.”