UK Retail Sales Log Unexpected Growth In May
UK retail sales logged an unexpected growth in May as bank holidays and warm weather boosted demand for outdoor-related goods and summer clothing.
Despite high inflation, British consumer confidence rose for the fifth consecutive month in June to hit a 17-month high, a closely watched survey revealed Friday.
Retail sales grew at a pace of 0.3 percent in May from April, the Office for National Statistics reported. This was in contrast to the expected fall of 0.2 percent. Nonetheless, the pace of growth slowed from April’s 0.5 percent increase.
Excluding automotive fuel, retail sales registered a marginal growth of 0.1 percent, following a 0.7 percent rise in April. Sales were expected to decline 0.3 percent.
Because of strong sales by online retailers, non-store retailing volume surged 2.7 percent in May. Data showed that warm weather boosted summer clothing sales.
Automotive fuel sales gained 1.7 percent, offsetting a 1.7 percent fall in April. Meanwhile, food store sales declined 0.5 percent and non-food stores sales slid 0.2 percent.
On a yearly basis, retail sales declined at a slower pace of 2.1 percent after a 3.4 percent fall in April. The decrease was also slower than economists’ forecast of 2.6 percent drop.
Excluding auto fuel, retail sales posted an annual drop of 1.7 percent after a 3.0 percent decrease in April. Economists had expected sales to fall 2.1 percent.
Although retail sales bounced back, recession risk is rising amid Bank of England’s rate hikes, James Smith, an ING economist said.
The BoE had raised its benchmark bank rate by a bigger-than-expected 50 basis points on Thursday citing persistence of inflation. At 5.00 percent, the current bank rate is the highest since 2008.
The market research group GfK said the consumer sentiment index rose to -24 in June from -27 in May. Three out of its sub-indicators improved in June. Consumers’ view on past and future personal finances and future general economic situation strengthened in June, while the major purchase index dropped marginally.
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