UK retail sales come in slightly ahead of expectations -UPDATE

Date: Thursday 21 Jun 2012

Retail sales volumes in the United Kingdom rose by 1.4% month-on-month (2.4% year-on-year) in June, following May´s 2.4% decline, according to the latest data from the Office for National Statistics (ONS).

The consensus estimate was for a reading of 1.2%.

Versus May sales at non-food stores grew by 1.3% month-on-month and by 0.2% in predominantly food stores. Sales at non-store retailers increased by 1.5%.

For the three months ended in June, and in quarterly terms, retail sales volumes increased by 0.9% (Consensus: 0.7%) if one excludes automotive fuels.

Store price inflation slowed to 0.9%, its lowest annual rate since October 2009.

Commenting on the data economists at Barclays are of the opinion that, “the data support the view that much of the weakness in consumption during 2011 was induced by the strength in shop price inflation as consumers were receiving less in volume terms for the same money spent. Furthermore, subdued earnings growth meant that consumers' ability to increase the value of their consumption basket at the same pace as price increases was limited. We expect consumption to be flat this quarter and to start growing again in the second half of the year, albeit at a slow pace.”

AB

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