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High Street is battered by summer downpours ONS said retail sales fell 1.2% in July, far worse than the 0.5% slide expected High Street slump came as FTSE 100 rounded off its third week of losses in a row Investors have been spooked by a cocktail of worries about the global economy By Hugo Duncan And Sean Poulter Published: 21:50, 18 August 2023 | Updated: 21:56, 18 August 2023 e-mail 35 View comments Heavy rain battered the High Street last month and washed away demand for summer staples from bikinis to barbecues. In a bleak update, the Office for National Statistics said retail sales fell 1.2 per cent in July, far worse than the 0.5 per cent slide expected by analysts. The slump on the High Street came as the FTSE 100 index fell 0.7 per cent, or 47.48 points, to 7262.43, rounding off its third week of losses in a row. Investors have been spooked by a cocktail of worries about the global economy, including rising interest rates and a slowdown in China where the debt-riddled property sector is creaking. Richard Hunter, head of markets at Interactive Investor, said the 'list of concerns' facing investors shows 'little sign of abating'. Despite a heatwave in Europe, the UK endured its wettest July since 2009, and the sixth wettest on record since 1836. Washout: Despite a heatwave in Europe, the UK endured its wettest July since 2009, and the sixth wettest on record since 1836 The wet weather and online promotions meant the proportion of sales made via the internet grew from 26 per cent in June to 27.4 per cent in July, the highest level since February 2022. There was a 2.6 per cent fall in retail sales volumes at the big supermarkets. While part of this was because of a drop in food sales, much of it was due to a fall in sales of other merchandise, particularly clothes. ONS deputy director for surveys and economic indicators Heather Bovill said: 'Retail sales fell sharply in July as poor weather impacted most sectors. It was a particularly bad month for supermarkets as the summer washout combined with the increased cost of living meant sluggish sales for both clothing and food. 'Department store and household goods sales also dropped significantly. 'The wet weather did mean a good month for online retailing, as discounting plus consumers shopping from the comfort of their homes boosted sales.' The update came on another grim day for investors as the Footsie clocked up its third week of losses in a row. The slump in London has been echoed across Europe and Asia as well as on Wall Street as concerns over higher interest rates, a slowdown in China and global recession wreak havoc on financial markets. Bond yields in the UK hit a 15-year high this week while in the US they are at levels last seen 16 years ago amid warnings that stubbornly high inflation will require interest rates to stay elevated for longer than previously thought. Rates in the UK – which have already been increased from 0.1 per cent to 5.25 per cent in just 21 months – are set to hit 6 per cent by the end of the year and remain there until the second half of 2024. That could prove to be a further headache for Rishi Sunak and the Conservatives should there be an autumn 2024 election. There was some respite yesterday as UK bond yields eased slightly after the slide in retail sales. RELATED ARTICLES Previous 1 Next Retail sales fall sharply as damp summer hits clothing... 'Barbenheimer' provides bumper July for Everyman Media Group MARKET REPORT: FTSE 100 clocks up fifth straight day of... Bitcoin hits two-month low as crypto and stock market... Share this article Share HOW THIS IS MONEY CAN HELP How to choose the best (and cheapest) stocks and shares Isa and the right DIY investing account But it was not enough to suggest the Bank of England will pause its interest rate hiking cycle any time soon despite fears rising borrowing costs could tip the economy into recession. The moribund German economy – which has been dubbed 'the sick man of Europe' – has already been hit by recession. By contrast, the US economy continues to defy expectations despite higher borrowing costs, and the US Federal Reserve this week warned of 'significant upside risks' to inflation. It was seen as a sign further rate hikes may be required, with investors also scaling back bets on rate cuts next year. Jason Da Silva, director of global investment strategy at Arbuthnot Latham, said stock markets were paying the price for bond yields soaring. 'The bond yields are saying you are probably going to have to keep rates higher for longer, and if growth starts to really pick up again, we might need to tighten further and stock markets are not liking that,' he said. The ructions on financial markets have spilled over into cryptocurrencies with bitcoin tumbling 10 per cent this week towards $26,000. Attention will turn to the annual meeting of top central bankers in Wyoming, next week with investors set to scrutinise a speech by Fed chairman Jerome Powell on Friday for clues on the outlook for interest rates. Russ Mould, investment director at AJ Bell, said: 'Whether it's the brewing crisis in the Chinese property market, the surge in US bond yields on fears rates will stay higher for longer or the big drop in UK retail sales, things are starting to look a bit ugly out there. 'The Footsie is demonstrating all the pep and get up and go of a teenager at 8am on a school day.' 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