Retail sales scrape by to growth despite weather

19 July 2012 10:40

Retail sales scrape by to growth despite weather

The public's enthusiasm for the Diamond Jubilee was pitted against dire weather conditions last month, highlighted by figures released today showing that retailers scraped by to a narrow margin of growth.

Retail sales volumes edged 0.1% higher between May and June, the Office for National Statistics (ONS) said, which fell short of City expectations of 0.6% growth.

The wettest June on record since 1910 was behind a 0.7% drop in food sales last month, the ONS said, while clothing retailers saw sales jump 2.5% as they brought forward their summer sales.

The impact of discounting and slowing inflation was seen in the 0.5% drop in retail sales values between May and June.

Against expectations, the Queen's Diamond Jubilee celebrations proved to be a disappointment, as the ONS said it did not have a "significant impact" on sales.

The weak performance in retail will dash any hopes that the economy might have emerged from its double-dip recession in the second quarter, ahead of official growth figures next week.

The economy entered a technical recession in the first quarter of the year, with gross domestic product declining 0.2%, following a 0.3% drop in the final quarter of last year.

The retail sector forms part of the powerhouse services industry, which accounts for 75% of the total economy in the UK.

The impact of the weather on food sales was reflected in inflation figures earlier this week, which showed the torrential rainfall had weighed on food retailers pricing power.

Elsewhere, department stores saw 0.2% growth in the period, while household goods stores grew by 0.3%.

The ONS reported 1.4% growth in so-called other stores, which covers a broad range of retailers, but was driven by sales in sporting goods and toys.

The total spent in the five-week period to June 30 was £32.7 billion, which compares to £26.4 billion in the four weeks to May 26.

Internet sales continued to grow, rising 14.3% to £493.3 million, and accounted for 8.5% of all retail sales values.

Some economists had expected the Diamond Jubilee to lift retail sales with consumers buying food and drink for street parties, purchasing souvenirs, and taking advantage of the extra bank holiday to go to the shops.