Title: U.K. Retail Sales Rise by 0.3% in July – ONS

Aug 19, 2022 02:58AM ET

By: AnalysisWatch

UK retail sales unexpectedly rose slightly in July from the previous month, recovering from two previous monthly declines, as a surge in online purchases outweighed a drop in demand for fuel caused by the heatwave.

According to data from the UK Statistics Authority, retail sales increased by 0.3%, following downwardly revised declines of 0.2% in June and 0.8% in May. Economists had expected the monthly figure to fall by 0.2%.

Retail sales outside brick-and-mortar stores, mainly from online stores, saw a jump in sales of 4.8%. The ONS said feedback from these businesses suggested that a series of promotions had helped boost consumer spending.

This increase helped to offset a 0.9 decline in automotive fuel sales. The ONS added that "anecdotal evidence" suggested that the recent run of hot weather in Britain may have reduced travel and, consequently, fuel purchases.

Overall, sales have remained above pre-pandemic levels but have been lower over the past year. Volume was down 3.4% year on year in July, down from 6.1% in June, indicating a wider decline in consumer spending due to rising living costs.

Friday's figures came after research by data provider GfK showed that consumer confidence in the UK has slumped to its lowest level since records began being kept around half a century ago. GfK's August consumer confidence index reading fell to minus 44, below the previous month's reading of minus 41.

Earlier this month, the Bank of England raised interest rates by 50 basis points the biggest increase since 1995 in an attempt to cool soaring inflation.

Traders now predict that borrowing costs will double over the next six months as the BoE steps up its campaign to cut price growth back to its 2% target.