A sunshine-fuelled rise in retail sales delivered a ray of economic cheer yesterday as UK consumers defied the cost of living crunch.
Official figures showed sales volumes rose by a better-than-expected 0.7 per cent in June as temperatures hit record highs for the month.
The hot weather boosted sales of barbecue food and analysts said demand for garden furniture was likely to have risen.
It adds to hopes that were ignited this week when inflation fell more sharply than anticipated. That stoked optimism that the worst of Britain’s prolonged cost of living squeeze could be over and that interest rates may not need to be hiked as much as feared. The 0.7 per cent retail sales increase was much better than the 0.2 per cent improvement that had been expected by economists.
And it follows a rise of just 0.1 per cent in May, when the economy was disrupted by an additional bank holiday for the Coronation.
Hot favourites: The pleasant weather boosted sales of barbecue food and garden furniture
Sales in June were however 1 per cent lower than in the same month last year.
Office for National Statistics chief economist Grant Fitzner, said: ‘Retail sales grew strongly, with food sales bouncing back from the effects of the extra bank holiday, partly helped by good weather, and department stores and furniture shops also having a strong month.
‘However, these were partially offset by falls in fuel, garden centres and clothes shops. Growth still fell on an annual basis, but at its slowest rate since the beginning of the Ukraine war.’
Sales in food stores increased 0.7 per cent in June, a bounce back from a 0.4 per cent fall in May.
But while sales at department stores were up, clothing and footwear stores saw sales fall.
Shops selling household goods enjoyed an increase of 1.4 per cent, thanks to strong sales in furniture stores.
Despite the cheer, there is still evidence of consumers being squeezed. A separate survey from market research firm GfK yesterday showed a sharp fall in consumer confidence this month, the first in six months.
The report said: ‘Reality has started to bite as people continue to struggle to make ends meet.’
Jacqui Baker, head of retail at RSM UK consultants, said: ‘With another rate hike in June from the Bank of England, soaring mortgage costs and rents are still very much a dark cloud over consumers, which leaves retail spending in a sticky situation.
‘The increase in sales will be a welcome boost for retailers.
‘But unfortunately, the positivity from last month could be short-lived, as the bad weather, rail strikes and lower consumer confidence could put a dampener on July’s results.’ And Jonathan Moyes, head of investment research at Wealth Club, said: ‘Whilst the picture may look rosy now, as the months grow colder, there is a risk the chill of higher mortgage costs and inflation will weigh heavy on household budgets.
‘The big question is – how much longer can the consumer hold out? Is this the last hurrah of summer spending before the cost of living squeeze really begins to really bite, or is the consumer in a stronger financial position than many predict?’
He added: ‘For now, the UK consumer continues to defy the doom-mongers.’
This post first appeared on Dailymail.co.uk
