Weather and World Cup blamed as high street sales wilt in June
UK retail sales fell back in June, as the football World Cup and hot weather saw consumers abandon the high street.
According the Office for National Statistics, in the three months to June 2018, sales increased 2.1%, the largest improvement since February 2015. Food stores saw the strongest three-month on three-month growth since May 2001, at 2.2%.
But in June, the upward trend came to an abrupt halt, with overall sales declining 0.5% against the previous month. Most analysts had been expecting a monthly rise of around 0.2%.
Year-over-year growth declined to 2.9% from 4.1% in May, which was also below the consensus, of around 3.5%
ONS senior statistician Rhian Murphy said: “Retail sales grew strongly across the three months to June as the warm weather encouraged shoppers to buy food and drink for their barbecues.
“However, in June retail sales actually fell back slightly, with continued growth in food sales offset by declining spending as consumers stayed away from stores and instead enjoyed the World Cup and the heatwave.”
Sterling fell on the update, tumbling to below 1.3000 against the dollar. It compounds a day of weak trading yesterday, when markets were caught out by data showing inflation had unexpectedly stalled.
Michael Hewson, chief markets analyst at CMC Markets, said of the June data: “The World Cup, which saw a big rise in the purchase of food, drink and big screen TVs, didn’t appear to manifest itself into the headline figures from the ONS.
“June retail sales came in at 0.5%, a number that appears to diverge from a number of other surveys that showed an increase in consumer spending in June. The weakness appears to have offered the perfect excuse for traders to push the pound below the $1.3000 level for the first time since September.”
Tom Stevenson, investment director for personal investing at Fidelity International, said: “We are in the middle of a long, hot barbecue summer punctuated by a Royal Wedding and football World Cup. April and May delivered strong growth so a reversion to the mean in June was to be expected.
“With only a short time to go before the next Monetary Policy Committee meeting, these figures probably won’t change the Bank of England’s calculations. These will continue to focus on weaker than expected inflation and wage growth. An August rate hike is in the balance; whether or not one is delivered, the trajectory thereafter will be extremely shallow.”