The rise in retail spending expected during the World Cup was stronger than anticipated, according to the Office for National Statistics.
Sales volumes rose by 0.7% over the month of June and May’s growth was also revised upwards, from 0.6% to 0.8%.
Fuelled by purchases of flat-screen TVs, the biggest winners were household goods and department stores, enjoying rises of 1.6% and 1.5% respectively.
The World Cup is expected to contribute to modest economic growth in the second quarter of the year, with the ONS forecasting 0.6% expansion, twice the level of the first quarter. However, with consumers mindful of their own personal debt and an ineivitable rise in public sector unemployment, as well as the forthcoming VAT rise to 20%, economists believe retail spending will be sluggish for the rest of the year.
It appears that the World Cup boosted sales despite falling consumer confidence and Budget uncertainty with regard to taxes and government spending
James Knightley, ING Financial Markets
The data suggests consumers were bargain hunting rather than buying big-ticket items, with summer sales at department stores particularly drawing in customers.
James Knightley of ING Financial Markets says: “It appears that the World Cup boosted sales despite falling consumer confidence and Budget uncertainty with regard to taxes and government spending... Clothing sales jumped 1% on the month, household goods rose 1.6% while ‘other stores’ saw sales increase 1pc, boosted by sales of electrical equipment.”
HSBC's Andrew Grantham says: “Sales volumes figures appear to have once again been aided by discounting in certain areas, notably household goods and clothing. The value of household goods sales was up only 0.7% on the month, compared to the 1.6% increase in volumes, while clothing sales by value were actually flat.
“The question is not so much how sales fared in June but the outlook over the second half of the year and there are big question marks over the robustness of household spending,” said Philip Shaw, UK economist at Investec.”
