Latest retail sales data for the UK during the month of July came out better than expected in the latest retail statistics released by the Office for National Statistics. ONS’s retail sales figures showed an increase in sales volume by 0.3% during July 2012 with figures being driven by an increase in fuel and departmental sales.
The increase in retail sales in July was 0.3% and showed an increased by 2.8% on an annual basis. On the contrary, markets were anticipating a drop of 0.1% with marginal increase of only 1.4%.
The retail sales figures for June were revised to 0.8% and a yearly increase of 2.6% against the previous estimates of 0.1% for the month of June and a 1.6% increase on an annual basis.
Excluding petrol, retail sales remained largely unchanged and was at 3.3% for the year against the estimates of 2%.
The ONS noted that feedback from retailers during the Olympic Games showed not much of an impact on sales. Echoing similar opnion, an independent study conducted by the British Retail Consortium showed no broad impact on retail on account of the Games and infact sales seemed to have slowed down for the month of July.
Analysts comment that the month on month volatility showed the fact that the retail sector was by and large bounded closely to the housing sector which has been going through one of the longest earnings sqeeeze in years.
The general outlook is that on the retail sector, trading conditions will likely continue to be challenging and tough unless the housing market shows signs of improvement.
ONS had previously revised its GDP forecasts showing a contraction of 0.7%, which was later revised to 0.5%. However with the improvement in the retail sector, the ONS outlook on the UK’s GDP could potentially improve.
The increase in oil consumption has put a dent in consumer spending with recent reports showing the consumer inflation rising to 2.6%. However the BoE expects to see the inflation return to its target of 2% towards the end of the year.
Read the full release of ONS’ July Retail Sales Report