June retail sales disappoint as bad weather hits industry

UK retail sales delivered a disappointing surprise in June, as bad weather hit sales, according to official figures released by the Office for National Statistics (ONS) on Thursday (21 July). The volume of retail sales, including auto fuel, increased 4.3% year-on-year compared with analysts' expectations for a 5.1% gain and with an downwardly revised 5.7% advance recorded in the previous month.

On a monthly basis, the quantity bought in the retail industry fell 0.9%, compared with expectations for a 0.5% drop and with a 0.9% increase in May.

Excluding auto fuel, meanwhile, retail sales fell 0.9% month-on-month compared with analysts' forecast for a 0.6% decline, while May's increase was trimmed down to 0.9%. On an annual basis and not accounting for fuel sales, retail sales grew 3.9%, falling short of the downwardly revised 5.2% gain recorded in May and of forecast for a 4.8% increase.

The ONS added average store prices, including petrol stations, fell by 2.5% year-on-year in June, while the amount spent in the retail industry decreased by 0.9% compared with May and increased by 1.5% compared with June 2015.

Online sales continued to be one of the market's main drivers, growing 14.1% year-on-year, although monthly growth in June was limited to just 0.5%.

"While there is so far little evidence that consumer spending has been immediately hit hard by the Brexit vote, a plunge in consumer confidence reported by GfK reinforces suspicion that consumers are likely to markedly rein in their spending over the coming months – particularly on big ticket items," said Howard Archer, chief UK and European economist at IHS Markit.

"It is also highly likely that consumers will face deteriorating fundamentals over the coming months"