UK retail sales jump unexpectedly as consumers go on spending spree

Economists had expected a 0.1% drop for month of June but instead, sales rose by 0.5%

Retail stores on the high street in Maidstone. Photographer: Chris Ratcliffe/Bloomberg

Retail stores on the high street in Maidstone. Photographer: Chris Ratcliffe/Bloomberg

 

UK retail sales surged unexpectedly in June as consumers prepared for an end to most coronavirus lockdown rules, adding to momentum in the economic recovery.

The volume of goods sold in shops and online rose 0.5 per cent from the month before, the Office for National Statistics said Friday. Economists had expected a 0.1 per cent drop. The figures followed an unprecedented jump in April when most stores were allowed to fully reopen for the first time since January.

The figures feed the debate about the strength of Britain’s recovery from 17 months of restrictions to control the virus. Pent-up consumer spending has driven up prices across the economy, lifting inflation above the Bank of England’s target for the first time in almost two years in each of the past two months. Policymakers led by governor Andrew Bailey are considering whether to pare back their stimulus as soon as next month.

Prime minister Boris Johnson dropped many of the last remaining rules on social distancing this week even though a surge in infections is stirring concerns about whether a further clampdown will be needed in the weeks ahead.

Sales in food stores bounced back in June, making the largest contribution to the increase after a sharp decline in May when consumers shifted spending to newly-reopened restaurants. That may have been linked to spending around the European championship soccer matches.

A separate survey by GfK showed consumer confidence rose above where its level in March 2020 when the pandemic struck the UK. It showed a big jump in a sub-measure with shoppers agreeing that now is the “right time to buy.” – Bloomberg