News

Drop in UK retail sales biggest in six months

UK retail sales posted the largest monthly decline in six months in June, the office for National Statistics (ONS) revealed.

The recent cold, wet weather is mostly to blame for the sharper-than-expected fall.

Keith Richardson, Managing Director for the retail sector at Lloyds Bank Commercial Banking said: “Fashion was hit hardest [in June] as the wet weather did nothing to boost sales of summer clothes, following an equally poor spring and a very mild winter. Unfortunately, this all adds up to a disaster for the fashion industry” [1].

Sterling fell against the dollar after the news, with analysts arguing that the negative effects of Brexit could also be partly to blame.

Strong turnover in April and May saw retail sales rise 1.6% in the second quarter, meaning the sector contributed to economic output during the period. Sales rose 4.3% from the previous year, boosted by events such as the European football championship and Queen Elizabeth II’s official birthday, the ONS stated [2].

Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics, highlighted “a correlation between the value of sterling and retail sales, which suggests the later could be about to plummet” [3].

The majority of the economists attached to the private sector have already lowered the expectations of growth for the current year and next year, due to the UK’s decision to leave the EU, with some even warning of a potential recession.

[1] Financial times UK retail sales drop 0.9% amid ‘disaster’ for fashion industry next.ft.com

[2] Bloomberg U.K. Retail Sales Fall 0.9% in Month of Brexit Referendum Bloomberg.com

[3] Independent Why today’s retail sales figures spell post-Brexit trouble for the UK economy, in four charts Independent.co.uk