Retail sales in small increase

by brian_turner

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Office for National Statistics (ONS) figures show that , the largest monthly growth since November 2004. The increase contradicted recent signs of a decline in spending and raised the annual growth rate to 1.6% from 1.3% in May.

According to retailers, the upturn was due to stores starting summer sales earlier than usual. The ONS said that the heatwave in late June stimulated sales of summer clothing and sportswear.

On a three-monthly basis, sales were 0.7% higher than the previous quarter. However, compared with the same period a year ago, sales in the three months to June increased by only 1.6%, the lowest annual growth since February 1999.

On a three-monthly basis, sales of clothing were up 3.5% and food sales increased by 2.5%. All retail sectors achieved sales growth in June, except household goods sales, which may be suffering the effects of a slowdown in the housing market.

Analysts said the monthly sales figures should ease fears that consumer spending has stalled but also said that the upturn in monthly sales volumes should be treated with caution.

The latest figures are unlikely to influence the Bank of England’s expected reduction in interest rates next month. Philip Shaw, chief economist at Investec, said he thought that the rates would still be reduced by a quarter-point.

Other analysts, however, believe that a recovery in consumer demand may delay anticipated interest rate cuts.

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