Retail sales in Great Britain slump by 1.2%; government borrowing figure for June is lowest since 2019 – business live

Retail sales fell by 0.1% in the second quarter from the first, contributing little to GDGP growth.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said this keeps his forecast for GDP growth in the second quarter at 0.6%, while the Bank of England has forecast 0.5%, “as consumer spending on services fares better while output is supported by business-to-business spending too”. He said:

As the weather took a turn for the worse in June so did consumers’ spending. Rainfall was 24% below average in June, compared to 19.7% above in May, but June was much cooler than May relative to the seasonal average. The temperature in June averaged 0.2 degrees below the norm, whereas May was the warmest since at least 1884. That probably explained the drop in sales in June.

Retail sales have been enormously volatile this year, as they are bounced around by the weather and measurement problems. That enormous volatility can disguise the underlying trend. Retail volumes were not booming in May and neither are they collapsing now. Year-over-year retail sales volumes growth is steadily, if unspectacularly, trending up as consumers’ real income growth improves, they have to replace items like televisions and clothes, and goods inflation slows relative to services.

Charlie Huggins, of the investment firm Wealth Club, said:

Retail sales volumes came in weaker than expected in June, following a stronger-than-expected May. This continues the volatility in monthly sales patterns seen since the turn of the year, with strange weather and economic caution playing a role.

Consumers weren’t exactly splashing the cash in June - sales in every category, excluding fuel, declined. But we should remember that May sales were especially strong. Sales volumes over the last 3 and 6 months are broadly flat and suggest the consumer is in reasonable health, but not exactly feeling flush.

The volatility in monthly retail sales is making it even more difficult than usual to read the economic tea leaves. June was not a great month for the sector. But inflation is moderating, wages are rising and the election is now done and dusted, providing much needed certainty. This means sales could easily bounce back over summer, especially if the weather Gods start being a little more kind.

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Retail sales in Great Britain slumped by 1.2% last month, with retailers blaming poor weather and cost of living pressures.

Retail sales volumes fell by 1.2% in June from May, following an increase of 2.9% in May, according to the Office for National Statistics. Economists had expected a smaller fall of 0.4%.

Sales fell across most sectors, and were down by 2.1% at non-food stores (department, clothing, household, and other non-food stores) while supermarkets and other food stores posted a 1.1% decline.

Grant Fitzner, the ONS chief economist, said department stores, clothing shops and furniture stores were the biggest contributors to the fall.

Retail sales fell back from May’s recent high point with falls across all main shop types, with the exception of petrol stations.

Retailer commentary suggested that both poor weather and economic conditions had an effect, as consumers showed caution with their spending.

Separate figures from the ONS showed the government borrowed £14.5bn in June, £3.2bn less than in June last year. It was the lowest June borrowing – the difference between public sector spending and income – since 2019.

Analysts had pencilled in borrowing of £12bn.

The interest payable on central government debt fell by £5.5bn to £7.4bn, largely because the interest payable on index-linked gilts (government bonds) rises and falls with the retail prices index, which has reduced sharply.