UK retail sales volumes fell unexpectedly in June, official figures have revealed, with the disappointing data helping push the pound below $1.30.
Figures published yesterday by the Office for National Statistics showed retail sales volumes dropped by 0.5 per cent month-on-month in June. Economists had forecast a 0.2% increase.
Food sales volumes rose by 0.1% month-on-month. However, sales volumes in the non-food category, which tends to include the more discretionary elements of consumer spending, fell by 1.1%.
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The pound was trading around $1.2984 in London at 5pm yesterday, down from about $1.3050 at its Wednesday close.
The fall in sales volumes in June followed sharp increases in April and May.
Retail sales volumes in the three months to June were up by 2.1% on the first quarter, which saw heavy snow and freezing temperatures. This was the sharpest growth in retail sales volumes in any calendar quarter since the opening three months of 2004.
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Howard Archer, chief economic adviser to the EY ITEM Club think-tank, said: “Given the extreme volatility of the monthly data, which can distort even the three-month averages, we often prefer to use a longer rolling average to better gauge the health of the sector. The six-months-on-six-months rate suggests that sales have held up reasonably well given the force of the headwinds from high inflation and weak wage growth, although sales growth remains well down on the 2014 to 16 period.
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“We find it difficult to envisage much of a pick-up in the short term. Although the squeeze on spending power has eased, it is still not improving, and consumers’ desire to borrow appears to be reaching its limits.”
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