The FTSE 100 outperformed European indices on Fridays as a weaker pound helped support overseas earners, offsetting weakness in retail stocks.
Reckitt Benckiser, AstraZeneca, Unilever, GSK and Diageo were among the top risers on Friday as investors continued to rotate into companies with reliable cashflows.
Retail companies suffered as the ONS statistics revealed a 0.3% jump in July retail sales and a 1.2% fall in sales over the three months to July, linked to rising 10.1% inflation as the cost of living crisis continued to bite.
B&M shares slid 1.8% to 408.8p, Howden Joinery fell 3.4% to 635.8p, JD Sports dipped 0.5% to 123.9p, Kingfisher dropped 3.4% to 239.5p and Next declined 2.8% to 6,150p.
“The consumer backdrop feels increasingly gloomy and that’s bad news because consumer spending is such an important contributor to the UK economy,” said AJ Bell financial analyst Danni Hewson.
Consumer confidence hit its lowest point since records began in 1974, representing nationwide fear brewing over the Russian invasion of Ukraine and impending recession concerns.
The trouble is set to worsen for consumer-facing companies, with the Bank of England’s next interest rates decision expected to hit businesses with more bad news as it fights to wrestle inflation back to its 2% target.
“The Bank of England faces the unenviable task of trying to get inflation down without inflicting too much pain on businesses and households and the seeming impossibility of this task is raising the spectre of prolonged stagflation – a slowing economy and surging prices,” said Hewson.
“That’s reflected in weakness in the pound, which is actually good news for a globally-orientated FTSE 100 as it flatters the relative value of overseas earnings.”
The Pound fell against the Dollar as record low consumer confidence and poor retail sales dragged the currency down 0.9% to 1.1816.
Meanwhile, Shell and BP shares rose on the blue chip index 1.4% to 2,248.5p and 1.3% to 447.8p, respectively, as the price of oil rose slightly. Brent Crude rose 0.5% to $97 per barrel on the back of continued high demand.