UK Retail Sales Surprisingly Drop

British retail sales grew by the most in over a decade in the second quarter of 2018, official data showed this morning, giving the Bank of England reassurance shoppers had shaken off a sluggish start to the year as it considers raising interest rates.

However, the sales volumes came in way below market expectations and therefore the pound has reacted negatively.

Retail sales volumes in June alone were down 0.5 percent from May as the World Cup kept some shoppers out of stores and at the low end of economists’ forecasts.

Sales for the second quarter were 2.1 percent higher than the first three months of the year, the biggest calendar-quarter increase since the first quarter of 2004.

The figures contrast with relatively soft wage growth and inflation data earlier this week which caused some economists to question whether the BoE will press ahead with a widely expected interest rate rise next month, only its second since the 2008 global financial crisis.

Earlier this month Mark Carney said the economy appeared to be growing as forecast – bolstering market expectations for a rise – though his deputy Jon Cunliffe, who opposed the last rate rise in November, said wages were growing a bit less than the BoE had forecast.

Overall economic growth in Britain this year is likely to be the weakest since 2012, according to the International Monetary Fund, which cut its forecast to 1.4 percent on Monday.

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