Retail sales rise by 0.6pc as households carry on shopping

RETAIL sales are on the up as British households refused to stop spending last month, defying the squeeze from rising prices.

Economists hailed the 0.6pc rise in sales in June and the 1.5pc increase over the second quarter as a sign that the UK could be growing more quickly than feared. Compared with the second quarter of 2016, sales volumes rose by 2.9pc.

Average shop prices increased by 2.7pc year on year, the Office for National Statistics said, although the recent slowing in fuel prices has limited the pace of inflation. When measuring retail sales by value, spending went up by 5.7pc on the year.

By contrast, wages only rose 1.8pc in the 12 months to May, putting strain on household finances. “June’s retail sales figures suggest that recent talk of a marked consumer slowdown has been overdone,” said Paul Hollingsworth, of Capital Economics.

“We shouldn’t get too carried away by these figures. After all, the retail sales figures are very volatile on a month-by-month basis.

“And the heatwave in June provided a boost to clothing sales that may not be sustained. Nonetheless, the fact that growth in sales values also accelerated in June suggests that households are not tightening their belts in response to higher inflation or Brexit uncertainty.” Overall, in the first half of the year sales were roughly flat, as second quarter growth outweighed a firstquarter slump.

That overall disappointing picture could mean that growth will struggle this year.

“Consumer spending has stalled, after a period of strong growth – with retail sales volumes increasing by 4.4pc a year in the three years 2014-16,” said Andrew Sentance, senior economic adviser at PWC.

“We should expect this subdued pattern of retail sales and consumer growth to continue in the second half of this year and into early 2018.”