World Cup and heatwave boost UK retail sales in July sending pound sterling up

Volumes were up 0.7 per cent, where City analysts had expected only a 0.2 per cent expansion

‘Food sales remained robust as people continued to enjoy the World Cup and the sunshine,’ said Rhian Murphy of the ONS (Getty)

Retail sales grew more rapidly than expected in July, helped by the World Cup and the heatwave, suggesting the UK consumer remains in reasonable health for now.

The Office for National Statistics reported on Thursday that volumes were up 0.7 per cent, where City analysts had expected only a 0.2 per cent expansion.

This followed a 0.5 per cent decline in June. Sales for the three months to July were the strongest since February 2015 at 2.1 per cent.

Online spending as proportion of sales hit a record high of 18.2 per cent.

“Many consumers stayed away from some high street stores in July, but online sales were very strong, supported by several retailers launching promotions. Food sales remained robust as people continued to enjoy the World Cup and the sunshine,” said Rhian Murphy of the ONS.

Fastest since 2015

Sterling, which has been weighed down by traders concerns about a no-deal Brexit, rose to $1.2727 in the wake of the release, up 0.24 per cent on the day.

Retail sales account for around 30 per cent of household spending and 20 per cent of GDP, making them an important indicator of economic momentum.

“The retail sales data provides reason to think that consumer spending growth could post a slightly improved performance in the third quarter,” said Andrew Wishart of Capital Economics.

But some analysts were less optimistic, pointing to easing earnings growth. Average pay growth slowed in July, the ONS reported earlier this week.

“While retail sales have been healthy recently, consumers still face a pretty challenging environment and there is no guarantee that they will spend at a robust rate over the coming months,” said Howard Archer of the EY Item Club.

The UK economy grew by 0.4 per cent in the second quarter of 2018, but activity slowed in June, the ONS estimated last week.

The biggest retail sale volume growth in July was seen in non-store retailing, followed by non-food stores.

Food store sales were flat and petrol station sales contracted.