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Retail sales grow again, but at a lower than expected rate

 

Office for National Statistics (ONS) figures show that UK retail sales volumes rose by 0.1% in July - up 4.2% on the same period a year ago.

 

Falls in sales of clothes and petrol were offset by strong growth in household goods sales, particularly electrical goods and furniture which were both up almost 20% on the month. Internet sales were up by 13% and accounted for 12.6% of all retail sales.

 

However, despite an improvement on the figure in June, when sales fell, both the monthly and annual figures were lower than expected.

 

Sterling fell slightly against both the dollar and the euro following the release of the data, easing pressure on the Bank of England to raise interest rates.

 

British Chambers of Commerce spokesman David Kern called the annual sales growth ‘very strong’, but said the monthly figure was ‘a reminder the recovery is still fragile. Given that falling store prices show deflation in the retail sector, we believe that the clamour in some quarters for early interest rate increases is premature.’

 

The year-on-year data showed growth for the 28th consecutive month, the longest period of sustained year-on-year growth since May 2008. Meanwhile, the ONS said the underlying pattern in the data, as suggested by the three-month on three-month movement in volumes, showed growth for the 29th consecutive month, which is the longest period of sustained growth since records began in June 1996.

 

Average store prices fell by 3% compared to the previous year, although this is largely due to an 11% fall in petrol prices.