UK Retail sales Preview: Retailers are set to suffer as back-to-school sales are seen not enough

The UK retail sales are expected to fall -0.2% m/m on total as well as core retail sales basis.
The unexpectedly strong increase in UK retail sales in July rises the bar for UK retailers as shoppers suffered the summer heat on beaches rather than on High Street and back-to-school sales are seen not enough to compensate.
Falling UK retail sales should not stand in the way of Sterling´s appreciation should the Brexit headlines turn positive as PM May attends Salzburg EU meeting.

Mario Blascak, PhD Independent Analyst

The total UK retail sales are expected to fall -0.2% over the month in August with core retail sales stripping the basket off motor fuel sales expected to fall also -0.2% m/m, the Office for National Statistics is expected to report on Thursday at 8:30 GMT.

When compared to a year ago, the total retail sales are seen decelerating to 2.3% y/y in August from 3.5% y/y in July while core retail stripping the gauge off motor fuel sales are expected to decelerate to 2.4% y/y from 3.7% y/y in July.

Deleceration in the UK retail sales has already been heralded by the report from the British Retail Consortium (BRC) in cooperation with KPMG that monitored the retail sales between July 29 and August 25 this year to find retail sales increased by 0.2% on a like-for-like basis from August 2017, when they had increased 1.3% from the preceding year.

¨Overall retail spending held up in August, but only just. Whilst any growth is welcome in the current environment, structural changes within the industry continue and there is clearly diverging performance across categories and retail business models,¨ Don Williams, UK Retail Partner from KPMG said in the August retail sales monitor.

Moreover, the back-to-school sales are not expected to compensate for the summer lull in sales as non-food categories remained lacklustre but those ¨retailers with a strong online presence once again managed to weather the storm better than their high street counterparts.¨

The retail sales monitor from the BRC in cooperation with KPMG measures changes in the actual value of retail sales including VAT, excluding automotive fuel and therefore it is an indication of total retail sales.

Contribution to the UK retail sale growth y/y

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Blaščák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

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