Retail Sales Grew Only Modestly In July

By Wiktor Szary and Jason Douglas Features Dow Jones Newswires

U.K. retail sales grew only modestly in July, and the previous month's growth was revised down significantly, new figures showed Thursday, suggesting above-target inflation continued to weigh on consumer spending.

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Sales rose by 0.3% on the month in July, the Office for National Statistics said, matching the new June figure, revised down from the original reading of 0.6%.

The July figure was slightly below the expectations of economists polled by The Wall Street Journal, who forecast a reading of 0.4%.

In annual terms, retail sales grew by 1.3%, also disappointing market expectations for a 1.7% expansion.

The July growth was driven solely by food and household goods stores, with sales in all other sectors declining compared with the previous month.

After a sluggish start to the year, retail sales rebounded somewhat in the second quarter, with warm summer weather enticing Britons to go out and spend.

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The industry made a 0.1 percentage point contribution to economic growth in the three month period, a figure unaffected by the latest revision of sales figures for June.

This allowed the largely domestic-driven economy to expand at a slightly faster rate compared with the preceding quarter, with quarterly growth at 0.3% in the April-June period.

This was 0.1 percentage point higher than the first-quarter figure, but still less than half the pace of growth seen in the final three months of 2016.

Inflation accelerated sharply following the pound's steep depreciation in the wake of the Brexit vote last year, squeezing British households' wallets.

Consumer price inflation stood at 2.6% in July, down from May's near four-year high of 2.9%, but still significantly above the Bank of England's 2% target.

As growth in earnings struggles to keep up with inflation, Britons have seen their real wages shrink for the fourth consecutive month in June, data showed earlier this week.

Write to Wiktor Szary at Wiktor.Szary@wsj.com and Jason Douglas at Jason.Douglas@wsj.com

(END) Dow Jones Newswires

August 17, 2017 04:56 ET (08:56 GMT)