(RTTNews) - UK retail sales recovered unexpectedly in July from June, official data showed Thursday.

The Office for National Statistics, or ONS reported that UK retail sales grew 0.8% month-on-month in July, recovering from a record fall of 4.3% in June. Economists had expected the retail sales to drop 0.2% in July.

The ONS has revised the monthly fall for June from a previous estimate of a decline of 3.9%.

Sales volume in predominantly food stores rose 0.3% in July and that for predominantly non-food stores were up 1.3%. At the same time, sales volume for the non-store retailing and repair sector edged down 0.1%.

However, annual growth in retail sales eased to the weakest since February 2006. Sales volume rose 2.1% in July from the previous year, down from June’s 2.2%. However, retail sales climbed more than the 1.8% rise expected by economists.

Further, the total retail sales value increased 3.8% annually to GBP20.6 billion in July compared with 3.4% rise in the prior month. Growth in sales value was driven by predominantly food stores and non-food stores.

Due to higher petrol and food prices, the implied price deflator in July showed an annual increase of 1.6%, which was the biggest rise since May 1998.

For three months ended July, sales volume grew 0.7% from the previous three month, which was mainly led by 1.2% growth in the predominantly non-food stores. Textile, clothing and footwear sales showed 3.1% increase, the highest growth since April 2007.

July’s retail sales data present a strong retail sales and private consumption than what was suggested by other indicators. Commenting on retail sales data, economists at BNP Paribas said retail sales would possibly slow in the months ahead as the economic outlook is deteriorating. Economists added that the Bank of England is expected to ease its monetary stance in the near term by a 25 basis point cut in interest rate.

Disputing the ONS finding, the British Retail Consortium said in a report that official retail sales data paint a more positive picture than most retailers would recognize. According to BRC, total sales value in July rose just 1.7% annually, while ONS figures suggest 3.8% growth in sales value.

BRC stated, “It’s hard to see what could produce the sales-growth boost ONS are reporting or their finding that smaller retailers are outperforming larger ones.”

Further, the BRC urged the Chancellor of the Exchequer Alistair Darling to reduce retailers’ price pressures and restore consumer confidence.

The Confederation of British Industry’s Distributive Trades Survey showed that summer sales failed to lure shoppers onto the high street, as the sales volume in July dropped and the outlook for August remained bleak. The balance of retailers reporting decline in sales was minus 36%, the weakest since the survey started in 1983.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2008 RealTimeTraders.com, Inc. All Rights Reserved

Posted in Categories: Economy, Forex, Releases, Stocks, UK.

Subscribe by RSS Subscribe by Email