As the UK growth forecast is downgraded, the BRC reveals UK retail sales values rose 0.6% on a like-for-like basis last month compared with July 2010, when sales went up 0.5%.
Total sales were up 2.5%, according to the latest BRC-KPMG Retail Sales Monitor.

Homewares were mostly down on a year ago and often promotion led, while big-ticket housing-related purchases continued to be hit by consumer caution. Food sales picked up in July after a poor June.

KPMG head of retail Helen Dickinson said: "With pay rises hard to come by, consumers continue to feel the squeeze of higher prices and an uncertain outlook. Retailers are hunkering down and managing stock tightly and none is particularly optimistic about the outlook, although many expect inflationary pressures to decrease in the latter part of the year."

BRC director general Stephen Robertson added: "This is a modest improvement on recent months but overall conditions remain very difficult for retailers. When you take into consideration inflation and January's increase in VAT, 2.5% growth effectively means people are buying fewer goods...

"Growing fears of a global economic slowdown and a sovereign debt crisis have sent shockwaves through financial markets. Policymakers in Europe and the UK must act quickly to implement a coordinated and credible strategy to reduce public sector deficits while supporting growth. Business and consumer confidence needs to be restored quickly before spending paralysis sets in."

Earlier today the Bank of England downgraded its UK growth forecast for 2011 from 1.8% to around 1.5%, saying Europe's debt problems pose some of the biggest risks to our economic performance.

According to reports from a press conference held this morning, Bank governor Mervyn King said the UK economy had weakened since May, and that inflation is still on course to hit 5%, but should fall back next year.