June retail sales decline but still best quarterly growth since 2015

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June retail sales ONS

Retail sales grew strongly across the three months to June, but on a month-on-month basis it suffered thanks to decrease in footfall.

According to the latest figures from the Office for National Statistics, retail sales grew 2.1 per cent over the quarter, as the warm weather, the royal wedding and major sporting events encouraged shoppers to stock up on food and drink.

ONS said the quarterly growth was also the largest rise since February 2015.

However, overall retail sales on a month-on-month turned negative, with June sales shrinking by 0.5 per cent compared to May, and well below the average expected growth of 0.4 per cent.

On a year-on-year basis, retail sales in June grew 2.9 per cent but this was still a slowdown from the 4.1 per cent annual increase recorded in May, and below average analyst forecasts of 3.9 per cent growth.

“Retail sales grew strongly across the three months to June 2018 as the warm weather encouraged shoppers to buy food and drink for their barbecues,” ONS senior statistician Rhian Murphy said.

“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.”

Tom Stevenson, investment director at Fidelity International, said: “The wide range of forecasts ahead of today’s 0.5 per cent reduction compared with May underscore the difficulty in reading much into the short-term signals from the high street.

“We are in the middle of a long, hot barbecue summer punctuated by a royal wedding and football World Cup.

“April and May delivered strong growth on the High Street so a reversion to the mean in June was to be expected.”

Lloyds Bank Commercial Banking retail sector managing director Keith Richardson said: “While the World Cup definitely got shoppers spending, these figures don’t cover the sudden rush of optimism that came with England’s progress beyond the initial group stage.

“What they do show is how challenging the retail sector is at the moment. Even the longest heatwave that many shoppers can remember hasn’t been enough to persuade consumers to really open their wallets.”

Capital Economics senior economist Ruth Gregory said: “Some of the second-quarter’s strength reflects temporary factors, such as a boost from the warm weather and the Royal Wedding celebrations.

“Crucially, though, the big constraint on spending – namely the squeeze on real wages from high inflation – has eased.”

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