The Office for National Statistics said growth has come from food and online retailers, but physical non-food stores are still struggling.
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Shoppers returned to high streets in increasing numbers last month but business at clothes and household goods stores remains below pre-pandemic levels, official figures show.
The Office for National Statistics (ONS) said total retail sales volumes in July rose 3.6% compared with June and are now 3% above pre-pandemic levels.
But it said there is a distinct split emerging between food and online retailers, which have surpassed February’s sales figures, and non-food businesses, which have not.
Deputy national statistician for economic statistics Jonathan Athow said: “Retail sales have now regained all the ground lost during the height of the coronavirus restrictions as more stores open for trade and online sales remain at historically high levels.
“While still below their pre-pandemic levels, both fuel and clothing sales continued to recover.
“Meanwhile, food sales fell back from their recent peaks as people started to venture back into pubs and restaurants.”
In July, the volume of food store sales fell 3.1% compared with June. Online sales also fell from June highs – back 2.1% – although both measures remain above pre-pandemic levels.
The retail industry contributes around 5.4% to gross domestic product (GDP), used to measure a nation’s growth, and is one of the biggest private sector employers in the UK.
However, the pandemic has led to more than 40,000 job losses already announced in the sector as business leaders said the industry is going through a structural, rather than cyclical, change.
As of July, clothing sales were 25.7% lower than February – shedding light on Marks & Spencer’s decision to axe around 7,000 jobs, primarily in its non-food division, earlier this week.
Household goods and DIY stores have enjoyed a strong recovery by comparison, and sat 6% above February levels in July, with stores reporting an increase in people carrying out home projects.
But total non-food store sale volumes were 6.6% lower than their pre-pandemic levels, with the DIY sector unable to offset the fashion stores, the ONS said.
Department store sector sales were 5.1% lower in July compared with February, it added, at a time when Debenhams is in administration, John Lewis has confirmed it will close stores, and House of Fraser may suffer without Government intervention, according to its owners.