By Claire West

Discounting, price cuts and an early start to 'the sales' helped retailers to a 'better than expected June'.

However last month also saw the demise of Jane Norman, the owners of Moben Kitchens and Habitat.

Stephen Robertson, Director General, British Retail Consortium, said:

"Sales continue to be under huge pressure from the squeeze on disposable incomes produced by rising inflation and low wage growth. Underlying conditions are still tough but being masked by a minor revival in non-food sales driven by price cuts and clearance events starting earlier this year.

On a total basis, sales were up 1.5%, against a 3.4% increase in June 2010.

Food sales growth slowed a little further, while non-food sales showed a modest improvement, driven by clearance sales starting earlier this year. These benefited homewares more than clothing and footwear, which many had already bought in April's sun. Consumer caution continued to hit big-ticket housing-related purchases.

Non-food non-store (internet, mail-order and phone) sales growth picked up a little in June after two slower months. Sales were 11.5% higher than a year ago, compared with 10.4% in May but 18% in June 2010.

Stephen Robertson continued;

"Given June's spate of shop closure announcements and weak company results, these figures are not as bad as they could have been but it shows just how tough times are when total sales growth of 1.5 per cent is regarded as not that bad. And remember, the higher VAT rate is making the year-on-year comparison look better than it really is, while retailers are coping with higher costs because of increased utility bills, rates and the burden of regulation.

"The modest sales improvement has been concentrated on less expensive things - home textiles and accessories - rather than big-ticket items."

Helen Dickinson, Head of Retail, KPMG, said:
"Across non-food, it was a better month than May. But we are certainly not out of the woods yet, as highlighted very starkly with the demise of a number of well-known brands during the course of June. Other than in food, many retailers continue to seek to reduce capacity through store closures. However, it was a welcome relief to know that May was not indicative of a new norm.

"All sectors, except women's clothing and footwear, achieved an improved performance. Food prices, and to a lesser extent non-food prices, continue to rise given the ongoing cost price pressures. Inflation and a higher level of VAT (20% this June and 17.5% last) is included in the measured sales value, and hence underlying volumes of sales continue to fall."