Scotland business

Food sales in Scotland increase for first time in 2016

Man shopping in supermarket Image copyright PA

Food sales from Scotland's shops increased last month for the first time since December.

But the rise was offset by a decline in non-food sales, according to the KPMG Scottish Retail Sales Monitor.

The figures came as retailers were warned to be prepared for the impact of Brexit amid early indications of faltering consumer confidence.

Overall, sales decreased by 1.4% in June compared with the same month the previous year.

Adjusted for deflation, measured at 2%, sales increased by 0.6% in real terms.

KPMG said grocery sales were up 0.1% in June compared with the same month in 2015.

It is the first reported sales growth since December 2015 and only the third time sales have increased in the last two years.

However non-food sales dropped by 2.6% compared to June 2015.

Image copyright Thinkstock

David McCorquodale, head of retail at KPMG, said: "Although total sales are down on last year, the grocery sector saw a change in fortunes, registering its first growth in sales since December.

"Big ticket items in the non-food category continued to perform strongly.

"Bolstered by a summer of sport, electricals fared particularly well, as consumers looked to buy the latest televisions to watch the football, tennis and golf.

"That being said, the food retail market continues to face challenges and we can't yet fully predict how the cost impact of leaving the EU will trickle down to the consumer.

"Where we have already seen an impact is on the rising cost of family holidays abroad. As a result, we expect to see retailers try to benefit from staycations and overseas tourists in the short term."

'Braced for change'

He added: "June also saw high street retailers, once again, fall victim to inclement weather. Introducing early sales didn't prevent seasonal lines being hit by an unpredictable weather front which, after an initial sunny spell, dominated from the second week in June through to the end of the month.

"One thing for certain is that regardless of the weather forecast, the retail sector should be braced for further change and uncertainty as the politicians begin the process of brokering a new deal with Europe."

Ewan MacDonald-Russell, of the Scottish Retail Consortium, said it was too early to say if Brexit would have an impact on retail sales or shop prices.

"Scottish retailers remain open for business, and the vote has not changed their commitment to deliver for customers," he said.

"However, there are signs that customer confidence may have faltered since June 23."

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