UK retail sales fall in June

UK retail sales have unexpectedly fallen in June according to figures from the Office of National Statistics (ONS), which showed the annual rate of sales growth slow down to 4% last month from 4.7% in May. However, year-on-year sales were up 4%, continuing a run of growth that stretches back over two years.

Falls in sales were reported by petrol stations, food stores and outlets selling household goods.

Howard Archer, chief UK and European economist for IHS Global Insight, said June’s sales data was “a little disappointing” but added that the figures were “not a body blow to improved second quarter growth hopes”.

According to the BBC, many analysts have been expecting retail sales to do well, with recent statistics showing wage increases are picking up while inflation remains near zero. Most economists are expecting next week’s first estimate of gross domestic product growth for the second quarter to show a notable bounce. The Financial Times has reported that growth is expected to “tick up” from the disappointing 0.4% quarter-on-quarter figure in the first three months of the year to about 0.6%.

In the past week, Bank of England Governor Mark Carney has hinted that UK interest rates could rise “at the turn of this year,” whilst minutes from the last meeting showed that some policy makers were close to voting for a rate rise. However, Chris Williamson, Chief Economist at Markit, said the fall in retail sales serves as a significant argument against those arguing for a rate rise, stating: “It’s always unwise to place too much emphasis on one month’s data… the retail sales fall nevertheless is a reminder that the policy outlook remains hugely uncertain.”