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Food sales fell for the first time this year in July as consumers decided to spend their new-found disposable income elsewhere, according to the latest retail data.

The monthly British Retail Consortium-KPMG sales monitor showed UK retail sales increased 1.2% on a like-for-like basis last month, compared with a 0.3% decline a year ago. On a total basis, sales were up 2.2%, against a 1.3% rise in July 2014.

Like-for-like food sales were down 1.6% between May and July as shoppers used extra cash from rising wages on furniture, home accessories and textiles as non-food sales grew 3.7% over the same period, the report said.

IGD CEO Joanne Denney-Finch blamed Britain’s unreliable and unpredictable weather for grocer’s woes. “Food and drink sales are particularly influenced by the weather at this time of year,” she added. “July began with a heatwave and strong food sales but the rest of the month was colder and wetter than average and July’s overall performance disappointed after a run of more encouraging months.

“The latest BRC-Nielsen Index showed a slight return to food inflation, and IGD’s ShopperVista data shows the number of shoppers anticipating falling food prices has dropped from 23% in January to 13% today. However, further oil price falls and forecasts for strong global harvests will put more downward pressure on food prices which is good news for shoppers but will constrain sales.”

David McCorquodale, head of retail at KPMG, said that grocers continued to feel the heat but it was an improvement from the “doldrums” of last year.

Morning update

The Co-op Bank has escaped a potentially massive fine of up to £120m over failings which led to it almost collapsing. Regulators from The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) decided, following a joint investigation, a fine could harm the lender’s recovery. It said it was “vitally important” that Co-op Bank’s capital resources were directed towards improving its “resilience”. However, the bodies found the bank fell short of its responsibility to be open with its regulators and added that the failings were severe enough to warrant significant fines but those penalties would not be levied.

Co-op Bank chairman Dennis Holt said in a statement to the London Stock Exchange this morning: “On behalf of the bank, I would like to apologise again to customers for these past failings and reassure them that the bank is a significantly stronger organisation today under the leadership of the current senior management team. The investigations by the regulators into what went wrong at the bank are very important and the board takes the censures extremely seriously.”

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