By Barbara Kollmeyer
U.K. retail sales rose modestly in July, surprising economists who were expecting a drop, while separately a survey showed plummeting consumer confidence.
Retail sales volumes rose by 0.3% in July 2022 following a fall of 0.2% in June 2022 —- revised from a fall of 0.1%, the Office for National Statistics reported on Friday. Economists polled by FactSet Research were forecasting monthly sales to drop 0.1%.
Excluding fuel, sales rose 0.4% on the month.
Over the last 12 months, while the value rose 7.8%, actual volume dropped 3.4%, showing the impact of inflation, which in the U.K. was 10.1% .
Non-store retailing, predominantly online retailers, made the biggest contribution to July numbers, rising 0.7%. The ONS said feedback from online retailers indicated that a range of promotions in July 2022 boosted sales.
Fuel sales fell 0.1% and non-food stores dropped 0.3%.
“Within the flat month on month retail sales headline there is a continued decline in the volume of goods bought but at higher prices. I expect volumes to continue to fall given the rising pressure on U.K. disposable income this winter,” said Emma Mogford, fund manager, at Premier Miton Monthly Income Fund, in a note.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0971% was last trading down 0.1% to $1.1909. The 10-year U.K. gilt rose 6 basis points to 2.388%.
Some attributed the pound’s weakness to a survey released Friday from GfK , whose consumer confidence index fell one point to -41 in June, setting a new record low, taking out the previous month’s record fall.
“With prices rising faster than wages, and the prospect of strikes and spiralling inflation causing a summer of discontent, many will be surprised that the index has not dropped further,” said oe Staton, client strategy director at GfK, in a press release.
“The consumer mood is currently darker than in the early stages of the Covid pandemic, the result of the 2016 Brexit referendum, and even the shock of the 2008 global financial crisis, and now there’s talk of a looming recession,” said Staton.