UK Retail Sales – Raining but not pouring!

UK retail sales fell by -1.2% m/m coming in worse than expected with the consensus focused at -0.6%. Year on Year retail sales growth has declined -3.2% from -1.6% in June also below consensus -2.1%.

This data is not going to help the feeling that the UK economy, despite the slightly better than expected Q2 GDP data last week, is not a laggard in the developed markets universe.

According to external economist Pantheon, rainfall in the UK for July was 78% above its 1970 – 2022 average and has been the main driver to the falls seen in food and non-food retail sales last month. The falls could have been even more severe if Amazon’s Prime Day did not fall in July.

But it’s not all bad news, given the increase in wage growth the expectations are for real disposable income to rise in Q4 especially as energy prices fall back and the increases in food and core good prices slow.

Mortgage refinancing remains a headwind for the UK, and it is unclear whether consumers will look to spend/save or pay of debt at this time but overall, there is some flicker of light for UK retail sales into the end of the year.
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