British retail sales hit 22yr low in June

 

British retail sales slumped in June at the sharpest monthly rate since the series began in 1986, more than wiping out May's record rise and bringing three-month growth to its slowest since late last year.

The Office for National Statistics said today retail sales volumes fell a much larger than expected 3.9 per cent in June, after a slightly upwardly revised 3.6 per cent jump in May and taking the annual growth rate down to 2.2 per cent.

Analysts had forecast a monthly fall of 2.5 per cent for an annual rise of 4.4 per cent.

Sterling fell and interest rate futures rose as the sharper than expected deterioration in sales encouraged investors to bet that the next move in borrowing costs could be down.

"We continue to favour aggressive rate cuts in 2009 with the policy rate touching 3.5 per cent lows seen in 2003," said James Knightley, an economist at ING.

Sales in the three months to June were up 0.6 per cent on the previous three months - the lowest rate since December 2007.

The figures show consumer spending is slowing but still holding up relatively well in the face of sharp house price falls and rising unemployment.

Both food and non-food sectors suffered their sharpest monthly falls on record after large jumps in May thanks to a heat wave boosting sales of clothes and summer food and drinks.

Household goods sales posted their biggest monthly fall since 1991 and textile, clothing and footwear sales fell at their sharpest monthly rate since 2002.

The only sector to post a rise on the month was non-specialised stores. The ONS said department stores may have had some early summer sales but otherwise prices on average in the overall retail sector were up 0.5 per cent on the year.

That was the biggest rise since May 2007.