June retail sales beat forecasts

UK consumer spending was stronger than expected in June, in spite of high inflation, as wage growth picked up, official data showed Friday.

Retail sales volume rose by 0.7 per cent in June from May, topping forecasts for an increase of 0.2 per cent, while year-on-year, they fell 1.0 per cent, compared with expectations for a decline of 1.5 per cent, according to the Office for National Statistics.

In value terms, sales, excluding fuel, rose by 1.2 per cent month on month in June, and 7.8 per cent year on year.

All the main sectors such as food, non-food and non-store retailing have seen increases, except fuel.

Food stores sales volumes bounced back with 0.7 per cent growth in June, following a fall of 0.4 per cent in May, with the good weather and promotions helping the sales. However, food store sales volumes were 2.6 per cent below their pre-coronavirus February 2020 levels.

Non-food stores sales volumes rose by 1.0 per cent in June, following a fall of 0.5 per cent in May. Non-store retailing sales volumes rose by 0.2 per cent in June, following a rise of 2.4 per cent in May.

Automotive fuel stores sales volumes fell by 0.3 per cent, after a rise of 1.7 per cent in May.

“It appears that warm weather drove consumers onto the high street in search of new clothing and garden furniture over the month. Whilst the picture may look rosy now, as the months grow colder, there is a risk the chill of higher mortgage costs and inflation will weigh heavy on household budgets,” Jonathan Moyes, Head of Investment Research at Wealth Club, commented.

“The big question is how much longer can the consumer hold out? Is this the last hurrah of summer spending before the cost of living squeeze really begins to really bite, or is the consumer in a stronger financial position than many predict?

“For now, the UK consumer continues to defy the doom mongers.”