UK retail sales rebounded in July, driven by summer discounts and a surge in spending at department stores and sports shops during the Euros football tournament.
According to the Office for National Statistics, the volume of goods sold in stores and online increased by 0.5 per cent in July, following a revised decline of 0.9 per cent in June. Although economists had predicted a 0.6 per cent rise, the June decline was less severe than initially reported at 1.2 per cent.
These figures suggest a more robust start to the third quarter, following a June slowdown in store sales that weighed on economic output. The data may also signal growing optimism that the worst of the cost-of-living crisis has passed, with inflation nearing the Bank of England’s 2 per cent target and job growth at its strongest since November.
Investors anticipate the Bank of England will reduce interest rates again this year, after cutting them on 1st August from a 16-year high. Double-digit inflation, which peaked in 2022, coupled with high borrowing costs, squeezed consumer budgets, forcing people to spend more while buying fewer goods. Retail sales volumes remain below pre-pandemic levels from early 2020.
