UK Retail Sales Rise More Than Forecast As Consumers Stir
UK retail sales rose in August at their fastest pace in four months, providing further evidence of a tentative pickup in consumer spending.
The quantity of goods sold in stores and online increased 1% from July, as did sales excluding auto fuel, the Office for National Statistics said Wednesday. The increase far exceeded the median forecast of economists and marked the first run of three consecutive gains since 2015.
The figures may fuel speculation that the Bank of England is approaching its first interest-rate increase in more than a decade. A majority of rate setters including Governor Mark Carney now believe policy will need to be tightened in the coming months amid signs that the worst may be over for inflation-squeezed households.
The pound strengthened after the data, climbing 0.7% to $1.3603 as of 9:35 am London time.
Sales were driven by spending on items such as watches and jewellery, a possible result of the weak pound attracting overseas buyers. There were also gains for floor coverings and dispensing chemists, the ONS said. Sales at department stores rose by 1.1% and non-store sales jumped 5% as consumers felt confident enough to spend more on non-essential goods.
But there were some signs of weakness as sales of clothing, footwear and household goods fell on the month. That reflects the squeeze on households from inflation, with average store prices jumping 3.2% in August from a year earlier.
Retail sales are unlikely to contribute to growth in the third quarter. Sales will fall unless September sees an increase of 2.9%, a figure last exceeded at the end of 2013.
The fragility of the outlook was underscored this week when Carney, in a speech in Washington, spoke of “considerable risks to the UK outlook” including Brexit.