Thursday February 29, 2024

UK shops pay penalty for World Cup fever

July 20, 2018

LONDON: British retail sales surprisingly fell in June as World Cup fever fuelled by England’s strong start in Russia kept fans away from stores, official data showed on Thursday.

Sales by volume dropped 0.5 percent in June from May, the Office for National Statistics (ONS) said. Analysts’ consensus had been for a rise of 0.2 percent in June.Sales jumped 2.1 percent in the quarter to June.

“Retail sales grew strongly across the three months to June 2018 as the warm weather encouraged shoppers to buy food and drink for their BBQs,” noted ONS senior statistician Rhian Murphy.

“However, in June retail sales actually fell back slightly, with continued growth in

food sales offset by declining spending in many other shops as consumers stayed away from stores and instead enjoyed the World Cup and the heatwave.”

Sterling slumped on the data, falling below $1.30 for the first time in ten months, with analysts saying that it lessened the prospect of an August interest rate hike from the Bank of England.

“The (retail) weakness... appears to have offered the perfect excuse for traders to push the pound below the $1.30 level for the first time since September,” said Michael Hewson, chief market analyst at CMC Markets UK.

It “has also thrown some added shade on whether the Bank of England will be able to raise rates in two weeks´ time”, he added.Markets have widely expected the BoE to increase its main lending rate next month by a quarter-point to 0.75 percent, with inflation remaining above the bank’s target.

But some recent weaker-than-expected UK economic data and uncertainty surrounding Brexit has cooled those expectations, even if some analysts are still forecasting a rate increase to occur.

“A 2.1-percent rise in volumes for retail sales for the second quarter will give the hawks some ammunition for next month’s meeting, but the market is now very sceptical that the BoE will have the ability to raise interest rates, especially given the ongoing (political) turmoil,” said Chris Beauchamp, chief market analyst at IG trading group.

England began their World Cup campaign in late June with wins over Tunisia and Panama, delivering a boost to pubs across the country, if not non-food stores.The team went on to reach the semi-finals in July, losing to eventual runners-up Croatia.