Economists Say Fundamentals Strong Despite British Retail Sales Dip

British retail sales suffered an unexpected dip last month, wrong-footing economists who said rising wages and lower prices still pointed to strong prospects for consumer spending, a mainstay of the country’s growth.

Sterling slid half a cent against the dollar after the Office for National Statistics reported a 0.2 percent fall in June retail sales on Thursday, prompting traders to reconsider bets on a Bank of England rate rise before the end of the year.

Annual retail sales growth fell to its lowest in nine months at 4.0 percent, down from 4.7 percent in May and well below the forecasts of economists polled by Reuters.

The data adds to uncertainty about how strongly Britain’s economy is bouncing back from a weak patch at the start of the year, after figures last week showed an unexpected rise in the unemployment rate for the first time in more than two years.

Bank of England policy discussions released on Wednesday showed a growing number of policymakers were edging towards voting for a rate hike, and Governor Mark Carney said on Tuesday that this could come into focus around the turn of the year.

Policymakers are relatively bullish about the economic outlook for Britain, but are divided over the robustness of a recent pick-up in wages which is needed to sustain growth and return rock-bottom inflation to more normal levels.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.