Mario Blascak, PhD
Independent Analyst
- Total UK retail sales fell -0.5% m/m in June while core UK retail sales excluding motor fuel sales decreased 0.6% m/m.
- Slumping retail sales add to the uncertainty regarding the prospects for the Bank of England hiking rates in August.
Retail sales were expected to deliver a solid increase in June as the proceeding English national team in the Football World Cup in Russia lifted the mood and promoted beer and BBQ sales according to the early retail sales reports.
Unlike the early estimates, the report from the Office for National Statistics (ONS) proved much darker economic reality for Britain with total UK retail sales falling -0.5% over the month in June while core retail sales excluding the motor fuel sales fell -0.6% m/m in June.
Over the year total retail sales increased 2.9% y/y in June, down from 4.1% in May and core retail sales decelerated to 4.0% y/y in June from 4.6% y/y in May.
“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. 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,” ONS senior statistician, Rhian Murphy said in the report.
The last three-months average growth rate of the UK retail sales lowered to 0.8%, down from 1.1% estimated previously. Lower retail sales in combination with the UK inflation decelerating above expectations add the uncertainty about the Bank of England’s willingness to hike the Bank rate on August 2, when it is scheduled to release its August Inflation Report accompanied with the press conference with Governor Mark Carney.
Regardless of the actual data, there is still about 75% probability of the Bank of England hiking the Bank rate in August, as the first-quarter economic slowdown is considered by the policymakers only a temporary weather-related blip.
Contribution to the annual growth rate of the UK retail sales
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
USD/JPY crashes nearly 450 pips to 155.50 on likely Japanese intervention
Having briefly recaptured 160.00, USD/JPY came under intense selling to test 155.00 on what seems like a Japanese FX intervention underway. The Yen tumbled in early trades amid news that Japan's PM lost 3 key seats in the by-election. Holiday-thinned trading exaggerates the USD/JPY price action.
AUD/USD rallies toward 0.6600 on risk flows, hawkish RBA expectations
AUD/USD extends gains toward 0.6600 in the Asian session on Monday. The Aussie pair is underpinned by increased bets of an RBA rate hike at its May policy meeting after the previous week's hot Australian CPI data. Risk flows also power the pair's upside.
Gold tests critical daily support line, will it defend?
Gold price is seeing a negative start to a new week on Monday, having booked a weekly loss. Gold price bears the brunt of resurgent US Dollar (USD) demand and a risk-on market mood amid Japanese holiday-thinned market conditions.
Ethereum fees drops to lowest level since October, ETH sustains above $3,200
Ethereum’s high transaction fees has been a sticky issue for the blockchain in the past. This led to Layer 2 chains and scaling solutions developing alternatives for users looking to transact at a lower cost.
Week ahead: Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.