LONDON (Reuters) – British consumers spent greater than anticipated in July, after sizzling climate and the World Cup continued to spice up meals gross sales and different retailers supplied reductions, pointing to a stable begin to the third quarter for the financial system.
FILE PHOTO: Shoppers and vacationers stroll alongside Oxford Street through the gross sales in central London, Britain, December 28, 2017. REUTERS/Russell Boyce/File Photo
Retail gross sales volumes rose by zero.7 p.c, and had been three.5 p.c increased than a yr earlier, above economists’ common forecasts in a Reuters ballot for a zero.2 p.c month-to-month rise and a three.zero p.c annual acquire.
This compares with gross sales progress a yr earlier of simply 1.1 p.c although is beneath charges seen in 2015 and 2016.
Sterling, which has fallen sharply over the previous couple of weeks attributable to fears that Britain might depart the European Union in March subsequent yr with none transitional deal, rallied a bit in opposition to the U.S. greenback after the information.
“Retail sales posted a robust increase in July, suggesting that some recovery in consumer spending is in the pipeline,” Andrew Wishart of Capital Economics stated.
Looking on the three months to July as an entire, which smoothes out some month-to-month volatility, retail gross sales grew by 2.1 p.c versus the earlier three months, the most important enlargement since February 2015.
Excluding gas purchases — which had been dented by increased oil costs — gross sales progress over the three months was the quickest since March 2004.
The gross sales progress comes regardless of difficult buying and selling situations for a lot of high-street retailers, which noticed division retailer chain House of Fraser search creditor safety final week.
High inflation and lacklustre pay will increase have weakened family spending energy for greater than a yr. Pay progress exhibits restricted indicators of strengthening as Britain prepares to go away the European Union in March subsequent yr.
Capital Economics’ Wishart stated he anticipated solely a slight enchancment in client spending through the third quarter of 2018 attributable to weak point in wages.
Britain’s financial system recorded stable however unspectacular progress within the second quarter of 2018 after unusually heavy snow weakened demand within the first three months of the yr, and earlier this month the Bank of England raised rates of interest for less than the second time in additional than a decade.
June and July had been unusually heat, and former surveys of client spending have proven that the soccer World Cup inspired some Britons to spend in pubs and bars fairly than in excessive road outlets.
“Many consumers stayed away from some high street stores in July, but online sales were very strong, supported by several retailers launching promotions,” ONS statistician Rhian Murphy stated. “Food sales remained robust as people continued to enjoy the World Cup and the sunshine.”
Clothing gross sales recorded their strongest year-on-year progress since December, additionally helped by gross sales promotions, the ONS stated.
Major clothes retailer Next (NXT.L) acquired a lift from Britain’s sizzling summer season with a 2.eight p.c rise in second-quarter gross sales however the style retailer doesn’t see the nice and cozy glow lasting, sticking to forecasts that point out little progress for the remainder of the yr.