K retail sales volumes rose 1.0% in June, comfortably beating economists’ expectations of a 0.3% fall and building on May’s 1.2% increase.
Retailers attributed the bounce to strong sales promotions and warmer weather, with fans, air conditioning units and outdoor furniture cited as key drivers of additional spending as consumers responded to soaring temperatures. Clothing and sports merchandise also gave sales a lift.
The back-to-back monthly gains suggest consumer spending held up better than feared going into the summer, defying broader concerns about household confidence.
“Forecasters were predicting a dreary month for retailers as shoppers were expected to take shelter from the heat. Instead, the heat appears to have led to a sales bonanza as shoppers stocked up on air conditioning units, outdoor furniture and sports merchandise as the World Cup got underway,” said Jonathan Moyes, Head of Investment Research at Wealth Club.
“Whilst it is pleasing to see our beleaguered retailers get a lift over the month. The reading will do little to improve consumer and business sentiment. The resumption of the Iran war in July has seen Brent Crude touch $100 again overnight. This will undoubtedly weigh on consumers in the latter half of this year as inflation again begins to take its toll. Mortgage rates are already responding to a likely rise in interest rates in response.”