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UK retailers see best sales in 6 months as Brexit slump fades
[LONDON] British retailers reported their strongest sales in six months in August, industry figures showed on Thursday, adding to signs that consumers are, for now, taking the country's vote to leave the European Union in their stride.
The Confederation of British Industry said its sales volume index rose to +9, its highest since February, from an initial slump after the Brexit vote to -14 in July.
Sales in September were expected to moderate. The expected sales index was +3 for next month, up from -12 in August.
The release was in keeping with recent data showing consumers shrugging off the shock Brexit vote, with retail sales boosted by warm weather and by overseas buyers attracted by a cheaper pound. "While the fall in sterling has boosted visitor numbers to the UK, it is likely to push up the price of imported goods over time, which will mean households will be more likely to rein back spending on non-essentials," Anna Leach, CBI Head of Economic Analysis and Surveys, said.
Price pressures in factories - which feed through into consumer prices - jumped in July as import prices rose at their fastest rate since 2011.
Samuel Tombs, an economist at Pantheon Macroeconomics, said he still expected growth in overall spending to slow sharply. "Away from the high street, there are clear signs that (consumer activity is) ...slowing down - falling new car registrations and declining mortgage approvals show households are shying away from big-ticket purchases." A survey on Wednesday showed the number of mortgages approved by British banks fell to its lowest in a year in July.
So far most data has shown less of a negative impact on the economy from the Brexit decision than some of the dire predictions made by supporters of remaining in the EU.
But Britain has yet to trigger the formal exit process that would start the two-year period for formal negotiations about the country's future relationship with the EU, leaving many companies uncertain about what Brexit will mean for them.
The CBI said an index of orders placed with suppliers was -7 in August, up from -34 in July and was expected to improve further next month. Investment intentions rose to +15 in August from their most recent previous reading of -13 in May.
The survey was conducted between July 27 and Aug. 12 and 131 firms took part.