British quarterly retail sales figures point to bank rate rise

British quarterly retail sales figures point to bank rate rise”

Economists had expected a fall back in the rate of annual retail sales growth, but not to this extent.

Figures yesterday showed that United Kingdom retail sales volumes fell 0.8% in September, reversing a jump in August and undershooting all economists' forecasts in a Reuters poll.

The U.K. Office for National Statistics said the jobless rate remained at 4.3% in the three months through August-the lowest level in more than 40 years.

Excluding petrol sales, retail revenues were down 0.7% in September compared to a month earlier, versus a consensus estimate for a 0.2% decline and a revised prior month's sales growth of 0.9%.

Online retailing was the only component to see positive sales, up 2.3 percent over those in September.

Retail sales volumes fell by 0.8% in September, according to data released this morning by the ONS.

It was the first monthly fall since May and fuelled speculation that a bounce seen over the summer may have been boosted by the weakness of the pound encouraging more tourists to come to Britain and fewer Britons to go on holiday overseas.

A rise in the bank rate would be the first time the central bank has raised the interest rate since July 2007, when the rate was 5.75 percent. This has given the pound a bit of a bloody nose on the currency markets, with investors scaling back their expectations of a rate rise from the Bank of England.

"Taking a longer term view the United Kingdom consumer has actually been relatively resilient to rising inflation and weak wage growth, and retail sales volumes are still ahead of where they were a year ago despite these headwinds".

British economic growth slowed visibly this year as complex Brexit negotiations soured consumer confidence and accelerating inflation-fueled by the pound's collapse in the wake of the Brexit vote last year-hit household spending.

James Smith, economist at ING Bank, said the Bank of England still looked likely to raise interest rates from 0.25% in November but a second hike in the following months was less assured.

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