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July retail sales shrug off Brexit woes

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Written by: Paloma Kubiak
18/08/2016
Retail sales in July are estimated to have increased by 5.9% compared with volumes last year, defying economic expectations, official statistics reveal.

The four-week period from 3 July to 30 July 2016 right after the Brexit result show that all sectors grew, with the main contribution coming from non-food stores.

Compared with June, sales made in the UK increased by 1.4% and again, the biggest area of growth was in the non-food stores.

The Office for National Statistics (ONS) also revealed that average store prices, including petrol stations, fell by 2% in July compared with the same period last year. Compared with June 2016, there was a fall of 0.8%.

Spending in the retail industry increased by 3.6% compared with July 2015 and 1.6% compared with June last month. The total amount spent in the retail industry came to £29.6bn, equating to an average weekly spend of £7.4bn.

Online spending leaped 16.7% in the year to July 2016 and by 1.2% from last month.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Britons reacted to the Brexit vote with a shopping spree, as consumers showed the referendum isn’t going to damage their spending habits, for the moment at least.

“So far the Brexit vote is failing to make a dent in hard economic data, despite confidence surveys being universally appalling. It’s early days yet, but evidence is gathering that a dip in sentiment may not be borne out by economic activity, either by consumers or businesses.”

However, he cautioned that it’s important not to hang too much significance on one month’s set of figures, but added the Bank of England might start to feel uncomfortable about its interest rate cut if economic data continues to follow this robust trend.

Ian Forrest, investment research analyst at The Share Centre, said the July retail sales were the latest in a series of important economic releases this week: Employment at a record high, average earnings up and a slight uptick on inflation which was slightly higher than expected. 

“Overall, the data this week was better than many expected, or feared. It certainly shows that concerns about a big economic slowdown in the run-up to the referendum were overdone, and there are indications that consumers have not significantly changed their behaviour in the first weeks following the referendum. Of course, it is still too early to make firm judgements about the impact of Brexit and formal negotiations with the EU have not yet begun, but investors should appreciate that this data is encouraging.”

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