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| Warm weather drives UK shoppers back to the stores | |
| (about 4 hours later) | |
| Retail sales rebounded in June as the sunny weather put consumers in the mood to update their summer wardrobes. | Retail sales rebounded in June as the sunny weather put consumers in the mood to update their summer wardrobes. |
| Sales rose by 0.6% last month, beating the 0.4% increase forecast by economists and following a sharp 1.1% drop in May, according to the Office for National Statistics (ONS). | Sales rose by 0.6% last month, beating the 0.4% increase forecast by economists and following a sharp 1.1% drop in May, according to the Office for National Statistics (ONS). |
| “A particularly warm June seems to have prompted strong sales in clothing, which has compensated for a decline in food and fuel sales for the month,” said Kate Davies, a senior statistician at the ONS. | “A particularly warm June seems to have prompted strong sales in clothing, which has compensated for a decline in food and fuel sales for the month,” said Kate Davies, a senior statistician at the ONS. |
| A better-than-expected June pushed up retail sales by 1.5% in the second quarter overall, following a 1.4% fall in the first quarter. | A better-than-expected June pushed up retail sales by 1.5% in the second quarter overall, following a 1.4% fall in the first quarter. |
| Economists cautioned that the rebound could prove temporary amid a sustained fall in real pay as prices rise faster than wages. The first estimate of UK growth in the second quarter, published by the ONS next week, is expected to show a slight pick-up from 0.2% growth in the first quarter. | Economists cautioned that the rebound could prove temporary amid a sustained fall in real pay as prices rise faster than wages. The first estimate of UK growth in the second quarter, published by the ONS next week, is expected to show a slight pick-up from 0.2% growth in the first quarter. |
| “Consumer spending has been a powerful engine of UK economic growth for the past three years, but has now lost momentum,” said Andrew Sentance, a senior economic adviser at accountancy firm PwC and a former member of the Bank of England’s rate-setting committee. | “Consumer spending has been a powerful engine of UK economic growth for the past three years, but has now lost momentum,” said Andrew Sentance, a senior economic adviser at accountancy firm PwC and a former member of the Bank of England’s rate-setting committee. |
| “The GDP figures for the second quarter are likely to confirm this picture of subdued economic growth. The vote for Brexit has created a more uncertain climate for business and a squeeze on consumers from higher inflation. We face the prospect of weak economic growth this year and next.” | “The GDP figures for the second quarter are likely to confirm this picture of subdued economic growth. The vote for Brexit has created a more uncertain climate for business and a squeeze on consumers from higher inflation. We face the prospect of weak economic growth this year and next.” |
| Alan Clarke, an economist at Scotiabank, said a rise in retail sales in June was unlikely to convince Bank policymakers that the time was right to raise interest rates. | Alan Clarke, an economist at Scotiabank, said a rise in retail sales in June was unlikely to convince Bank policymakers that the time was right to raise interest rates. |
| “While today’s reading is welcome news and may limit any further downside to GDP growth during the second quarter, I doubt that the middle ground on the Bank’s monetary policy committee is going to get more hawkish on the back of sales of paddling pools and flip flops,” he said. | “While today’s reading is welcome news and may limit any further downside to GDP growth during the second quarter, I doubt that the middle ground on the Bank’s monetary policy committee is going to get more hawkish on the back of sales of paddling pools and flip flops,” he said. |
| Clarke predicted the MPC would leave UK interest rates on hold at an all-time low of 0.25% at its next meeting in August, despite an inflation rate of 2.6% that is above the Bank’s 2% target. | Clarke predicted the MPC would leave UK interest rates on hold at an all-time low of 0.25% at its next meeting in August, despite an inflation rate of 2.6% that is above the Bank’s 2% target. |