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BRITAIN-ECONOMY-RETAIL
UK shops pay penalty for World Cup fever
LONDON, July 20, 2018 (BSS/AFP) – British retail sales surprisingly fell
in June as World Cup fever fuelled by England’s strong start in Russia kept
fans away from stores, official data showed on Thursday.
Sales by volume dropped 0.5 percent in June from May, the Office for
National Statistics (ONS) said. Analysts’ consensus had been for a rise of
0.2 percent in June.
Sales jumped 2.1 percent in the quarter to June.
“Retail sales grew strongly across the three months to June 2018 as the
warm weather encouraged shoppers to buy food and drink for their BBQs,” noted
ONS senior statistician Rhian Murphy.
“However, in June retail sales actually fell back slightly, with continued
growth in food sales offset by declining spending in many other shops as
consumers stayed away from stores and instead enjoyed the World Cup and the
heatwave.”
Sterling slumped on the data, falling below $1.30 for the first time in
ten months, with analysts saying that it lessened the prospect of an August
interest rate hike from the Bank of England.
“The (retail) weakness… appears to have offered the perfect excuse for
traders to push the pound below the $1.30 level for the first time since
September,” said Michael Hewson, chief market analyst at CMC Markets UK.
It “has also thrown some added shade on whether the Bank of England will
be able to raise rates in two weeks’ time”, he added.
Markets have widely expected the BoE to increase its main lending rate
next month by a quarter-point to 0.75 percent, with inflation remaining above
the bank’s target.
But some recent weaker-than-expected UK economic data and uncertainty
surrounding Brexit has cooled those expectations, even if some analysts are
still forecasting a rate increase to occur.
“A 2.1-percent rise in volumes for retail sales for the second quarter
will give the hawks some ammunition for next month’s meeting, but the market
is now very sceptical that the BoE will have the ability to raise interest
rates, especially given the ongoing (political) turmoil,” said Chris
Beauchamp, chief market analyst at IG trading group.
England began their World Cup campaign in late June with wins over Tunisia
and Panama, delivering a boost to pubs across the country, if not non-food
stores.
The team went on to reach the semi-finals in July, losing to eventual
runners-up Croatia.
BSS/AFP/HR/1120