Retail sales outstrip expectations

Retail sales exploded during July, defining a much brighter outlook, official figures suggest.

The Office for National Statistics revealed that retail sales volumes jumped by 1.1% in July compared to June. Additionally, year-on-year sales volumes showed an increase of 1.3%.

The results show that retail sales unexpectedly grew at its fastest pace since February, with non-food sectors showing strongest progress.

A much higher than anticipated rise in sales volumes was recorded as economists originally expected that sales growth would slow to 0.4% in July from 0.7% in June.

Analyst Vicky Redwood of Capital Economics commented:

“Generally good set of data on the UK this morning. For a start, retail sales posted a surprisingly strong 1.1% monthly rise in July - with non-food sales up by some 1.8%. Although the 6% odd rise in ‘other stores’ looks a bit suspicious, it doesn't look for now like the slowdown emerging in the rest of the economy has spread to the high street yet.”

In addition, Ross Walker from RBS said:

“The bottom line is that income growth has been squeezed as a result of employment trends and more muted pre-tax earnings, but our spending growth is still pretty much in line with our income growth, and for that retailers should be grateful.”