Economy

United Kingdom retail sales climb in August

United Kingdom retail sales climb in August”

The Office for National Statistics (ONS) revealed retail sales increased by 1% compared with July, and by 2.4% compared to August 2016.

Compared to the previous month, sales rose one per cent - also above predictions of a much smaller month-on-month growth of 0.2 per cent.

Some of Britain's biggest retailers felt the love following the ONS update, with shares in Marks & Spencer rising 2.26% to £3.48p and Next's shares rising 1.35% to £50.43p. "Either we dipped into our savings or we borrowed more last month".

The ONS said increased spending in non-food shopping trips such as department stores and DIY outlets was what drove the improved figures.

The price increase was particularly evident in the fuel sector, with the cost of petrol jumping by 5% over the past 12 months and the volume sold subsequently dropping by 1.1%.

Sterling jumped sharply on the news, gaining three-quarters of a cent against the dollar and half a cent against the euro.

Indeed, after previously warning the markets that a rate rise was on the way then failing to deliver, this latest run of economic data could be enough for the Bank to make its first move for a decade, when it next meets in November.

Prices in British shops continued to rise in August, the ONS said, reflecting the wider increase in overall inflation over the past year as the depreciation of the value of the pound seen since the vote.

The unexpected increase in August UK retail sales boosted the British pound, as it increases the likelihood the Bank of England (BOE) will raise interest rates before the end of 2017.

"Spending has defied expectations of a slowdown since the Brexit referendum, and now seems to be holding up despite weak wage growth and above-target inflation".

The Organisation for Economic Co-operation and Development said Wednesday the slowdown in the United Kingdom growth is expected to continue through 2018, while uncertainty remains over the outcome of negotiations around the Brexit decision.

"Today's retail sales figures indicate that consumers are showing an impressive resilience in the face of the ongoing real pay squeeze", said Ruth Gregory of Capital Economics.

"If this fails to materialise the economy could see a stronger second half to the year - though there are also growing concerns over the level of household debt, which is fuelling continued consumption in the absence of rising real wages".



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