The rise in inflation took a hit on consumer confidence in July; however, there was a slight increase in retail spending.

Consumer expectations worsened to -33 in July, lower than the -28 reported in June, according to figures from the BRC-Opinium data.

Additionally, the expectations regarding consumers’ personal financial situation dropped to -7, compared to -5 in the previous month.

However, the retail sector showed signs of improvement, with personal spending on retail increasing to +3 in July from +2 in June. Personal savings also increased to -3 in July, compared to -4 in June.

Helen Dickinson, chief executive of the British Retail Consortium, said: “With the UK economy shrinking for the second consecutive month, it is little surprise that consumer confidence fell in July. Rising inflation, particularly for food, has put more pressure on personal finances, increasing the cost of living.

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“This has caused spending expectations to rise, particularly for groceries, as households anticipate higher prices at the till.”

Retail executives blamed the recent changes to minimum living wages and higher national insurance fees for inflation.

She added: “Despite fierce competition between retailers, retail inflation has risen steadily over the last nine months as a result of the Chancellor’s last budget, which significantly increased employment costs.”

There has also been criticism from retail executives over the proposed higher business rates, which may worsen inflation.

Dickinson commented: “Further tax rises hitting the retail industry at the next budget would likely fan the flames of inflation as retailers are forced to increase prices. The Chancellor has the opportunity to support households and high streets: the proposed business rates reforms could make the system fairer, provided the Government ensures that no store pays more as a result.”