UK retail sales unexpectedly fall as food, furniture drop

[LONDON] UK retail sales unexpectedly declined in June on a wide range of goods including food, furniture, sporting equipment and jewelry.

The volume of sales including auto fuel fell 0.2 per cent from May, the Office for National Statistics said in London on Thursday. Economists forecast a 0.4 per cent increase, according to a Bloomberg survey.

On an underlying basis the picture for retail sales remains strong, said Kate Davies, a statistician at the ONS. Growth rose 0.7 per cent in the three months through June, the 28th quarterly gain and the longest stretch of increases since records began in June 1996. Retail sales may have contributed about 0.04 percentage point to overall economic growth in the period, the statistics office said.

Persistently low inflation and stronger wage growth are leaving Britons with more pounds to spend and helping them support expansion. Bank of England policy makers see price gains picking up at the end of the year, and Governor Mark Carney said this week the outlook for the first interest-rate increase will be clearer at that time.

The pound erased its gain against the dollar after the data were published, and was little changed from yesterday at US$1.5612 at 9.33 am London time.

From a year earlier, retail sales rose 4 per cent in June. Excluding auto fuel, sales fell 0.2 per cent on the month, and were up 4.2 per cent from a year earlier.

Food sales fell 0.3 percent in June from May, while household goods - which include furniture and appliances - dropped 0.9 per cent. The ONS didn't give a broad rationale for the weakness, though it noted industry data showing a drop in footfall in shopping districts.

The retail price deflator held at minus 2.9 per cent in June. The deflator on fuel was minus 10 per cent and the food- price deflator was minus 1.9 per cent.

BLOOMBERG