Xinhua, London :
Expectations of a small rise in retail sales volumes for June were hit by the World Cup and a late start to the annual summer discount season, but will not dent strong growth for Q2 in Britain.
The retail sales volume figures from the Office of National Statistics (ONS) Thursday disappointed economists who had predicted a 0.3 percent rise in high street sales.
Instead the figures recorded a fall of 0.1 percent, if fuel is stripped out of the figures.
Explanations are easy to find-the lengthy World Cup kept consumers in front of TV screens rather than on the street shopping, and this year the annual summer sales season got off to a late start.
The loss of revenue caused by the World Cup is not unusual for such big and long events-the previous six World Cups all had similar effects on high street sales. And the good news for the economy and retailers is that the lost revenue is likely to be made up in the July figures, as it has after previous World Cups.
Retail sales volumes are currently a good indicator of the strength of the UK economic recovery, currently powering ahead and likely to produce a 3.1 percent GDP growth this year, according to the central bank the Bank of England.
A slightly longer perspective on the figures, comparing rolling three month figures, reveals a more accurate take on the continued British recovery, with 1.9 percent growth, excluding fuel figures, for Q2 April-June. This is the 16th consecutive month in which retail sales volumes have risen.
When these figures are extended annually they show 4 percent growth, demonstrating how central consumer spending is to the British recovery.
This is not sustainable in the long term, especially with wages growth currently at 0.7 percent per annum and inflation hitting a surprising 1.9 percent in June, and economists are poised to pounce on data which shows a slowdown in spending has begun as households react to the reality that their incomes may not be matching their outgoings.
Many economists have pencilled in a slowdown for the second half of this year, but with a rebound in the figures from the World Cup hit set to take place this month, it is too early yet to make the call that the slowdown has started.
However the rate-setters on the Bank of England Monetary Policy Committee (MPC) will take heart from the continued robust retail performance, and draw the conclusion from the figures that the economic recovery maintains its strong growth momentum and is likely to do so for much of the second half of the year at least.
Under those conditions, the retail sales figures would strengthen the case for MPC members to vote for an earlier rise in the Bank Rate than some have expected, possibly in November, as it moves towards returning monetary policy to normal.
As a result the debate over when to raise the rate from its historical low of 0.5 percent is likely to be aired in public extensively over the coming months.
Expectations of a small rise in retail sales volumes for June were hit by the World Cup and a late start to the annual summer discount season, but will not dent strong growth for Q2 in Britain.
The retail sales volume figures from the Office of National Statistics (ONS) Thursday disappointed economists who had predicted a 0.3 percent rise in high street sales.
Instead the figures recorded a fall of 0.1 percent, if fuel is stripped out of the figures.
Explanations are easy to find-the lengthy World Cup kept consumers in front of TV screens rather than on the street shopping, and this year the annual summer sales season got off to a late start.
The loss of revenue caused by the World Cup is not unusual for such big and long events-the previous six World Cups all had similar effects on high street sales. And the good news for the economy and retailers is that the lost revenue is likely to be made up in the July figures, as it has after previous World Cups.
Retail sales volumes are currently a good indicator of the strength of the UK economic recovery, currently powering ahead and likely to produce a 3.1 percent GDP growth this year, according to the central bank the Bank of England.
A slightly longer perspective on the figures, comparing rolling three month figures, reveals a more accurate take on the continued British recovery, with 1.9 percent growth, excluding fuel figures, for Q2 April-June. This is the 16th consecutive month in which retail sales volumes have risen.
When these figures are extended annually they show 4 percent growth, demonstrating how central consumer spending is to the British recovery.
This is not sustainable in the long term, especially with wages growth currently at 0.7 percent per annum and inflation hitting a surprising 1.9 percent in June, and economists are poised to pounce on data which shows a slowdown in spending has begun as households react to the reality that their incomes may not be matching their outgoings.
Many economists have pencilled in a slowdown for the second half of this year, but with a rebound in the figures from the World Cup hit set to take place this month, it is too early yet to make the call that the slowdown has started.
However the rate-setters on the Bank of England Monetary Policy Committee (MPC) will take heart from the continued robust retail performance, and draw the conclusion from the figures that the economic recovery maintains its strong growth momentum and is likely to do so for much of the second half of the year at least.
Under those conditions, the retail sales figures would strengthen the case for MPC members to vote for an earlier rise in the Bank Rate than some have expected, possibly in November, as it moves towards returning monetary policy to normal.
As a result the debate over when to raise the rate from its historical low of 0.5 percent is likely to be aired in public extensively over the coming months.
