Retail sales grew rapidly in July, thanks to the heatwave and the World Cup.
New figures from the Office for National Statistics (ONS) showed that UK retail sales increased 0.7 percent in July.
“Many consumers stayed away from some High Street stores in July, but online sales were very strong, supported by several retailers launching promotions,” said ONS statistician Rhian Murphy.
“Food sales remained robust as people continued to enjoy the World Cup and the sunshine.”
The strong retail sales are compared to the 0.5 percent decline in June.
Total spending online reached a new record and hit 18.2 percent in July. Clothing sales also recorded their strongest year-on-year growth since December, according to the ONS.
“Of course, retail sales only account for about a third of total household spending, so the strength of spending on the High Street could be offset by households reducing their outlay elsewhere,” said Andrew Wishart, UK economist at Capital Economics.
“Admittedly, still-weak real wage growth will weigh on consumer spending,” he added. “Nonetheless, the retail sales data provides reason to think that consumer spending growth could post a slightly improved performance in the third quarter,” he added.
Following the news, the pound was up 0.24 percent against the dollar at $1.2727.
“The reaction from the pound… has been muted, suggesting that the wider view of the UK economy is still bleak,” said Hamish Muress, the currency analyst at OFX.
“With the chances of a no-deal Brexit scenario high, wage growth shrinking and inflation rising, the Bank of England may find it difficult to follow through on any previous notions of further interest rate hikes in the future.”
“As long as this outlook remains, the pound will continue to be under sustained pressure.”
