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Retail Sales Rise More Than Expected On World Cup Boost

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Retail sales volumes rose faster than expected at 0.7pc over the month, while May’s sales increase was also revised up from 0.6pc to 0.8pc, the Office for National Statistics (ONS) said. Household goods stores and department stores were the biggest contributors to the June rise with sales growth of 1.6pc and 1.5pc respectively.

James Knightley of ING Financial Markets said: “It appears that the World Cup boosted sales despite falling consumer confidence and Budget uncertainty with regard to taxes and government spending... Clothing sales jumped 1pc on the month, household goods rose 1.6pc while ‘other stores’ saw sales increase 1pc, boosted by sales of electrical equipment.”

Strong consumer spending is expected to feed into solid economic growth in the three months to June, with the ONS’s first estimate forecast today to show growth of around 0.6pc in the three months to June – twice the level of the first quarter. However, economists reckon the economy will struggle for the rest of the year.

“The second quarter is going to be as good as it gets and then we’re going to go into a soft patch,” Alan Clarke of BNP Paribas said. Mr Knightley added: “With consumer confidence having weakened so much and significant fiscal austerity on its way this is likely to mark the high point for growth for several quarters. Indeed, both the CBI and British Retail Consortium data is pointing to a much weaker retail environment.”

The retail sales numbers showed that consumers tend to be bargain hunting rather than buying big ticket items. Shoppers were drawn in by summer sales as prices across non-food stores fell year-on-year for the first time since last November – led by price-slashing at department stores and household goods retailers.

Andrew Grantham, of HSBC, said: “Sales volumes figures appear to have once again been aided by discounting in certain areas, notably household goods and clothing. The value of household goods sales was up only 0.7pc on the month, compared to the 1.6pc increase in volumes, while clothing sales by value were actually flat.”

“The question is not so much how sales fared in June but the outlook over the second half of the year and there are big question marks over the robustness of household spending,” said Philip Shaw, UK economist at Investec.

The World Cup gets the blame for falling house sales etc... yet it's good news for the consumer economy.

Looks like it's a discount recovery.

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