Post-Brexit retail sales smash expectations in UK.
LONDON — British retail sales last month smashed expectations following the United Kingdom’s shock vote to leave the European Union, official figures showed Thursday.
Analysts say the figures, along with others released earlier this week, paint a better-than-expected picture of Britain’s economy following the June 23 referendum.
The Office for National Statistics (ONS) said retail sales volumes jumped 1.4% in July compared with the previous month. Economists had expecting a month-on-month rise of 0.1% in July and a Reuters poll predicted a rise of 0.2%.
Joe Grice, chief economic adviser at the ONS, said warm weather could be a major factor in driving clothing and footwear sales, which he said did particularly well.
“These are strong numbers showing a pronounced increase in sales compared with last July,” Grice said. “There is also anecdotal evidence from respondents suggesting the weaker pound has encouraged overseas visitors to spend.”
Figures released this week are the first official data to give an insight into the economy since the referendum. The pound plummeted after the vote amid economic uncertainty.
The pound rose 1.22% to $1.3172 Thursday after the retail figures came out — its highest level since August 5 after the Bank of England unveiled a stimulus package.
Other figures released this week showed signs of inflation pressures building after the pound fell which could affect future purchases by families, while the vote for Brexit had little immediate impact on the labor market.
Trevor Charsley, a senior markets adviser at the London-based money transfer firm AFEX, said: “The retail sales figures, coming hot on the heels of inflation and unemployment data, complete a hat-trick of U.K. data releases this week that paint a healthier than expected picture of the U.K. economy.”
He said the data could boost the pound, which has been strengthening recently, “but this will probably be short lived as the wider consequences of Brexit remains unclear and further monetary easing is still on the horizon.”
“We see the potential for the pound to fall to 1.2000 against the dollar by the end of the year,” he said.