In a positive turn after a sluggish June, UK retail sales rose 0.5% in July, according to economists' forecasts. The development comes after cold and wet weather that has already hampered economic expansion.
The Office for National Statistics said sales volume in July was 1.4% higher than in the same month last year, matching economists' average forecast. However, sales volume was still down 0.8% compared to pre-pandemic levels in February 2020.
An easing of the inflationary pressures that weighed on British consumers throughout 2022 and 2023 is now evident. Inflation rates returned to the Bank of England's 2% target in May and June, with July seeing a slight increase. Notably, wage growth has outpaced inflation by the largest margin since mid-2021 during the second quarter.
In a related move, the Bank of England cut interest rates from a 16-year high earlier this month. At the same time, Britain's long-term consumer confidence level reached its highest level in nearly three years last month, indicating that consumers felt their financial situation had improved and were more interested in making significant purchases.
Despite these positive indicators, the retail scene presents a mixed picture. Apparel retailer Next beat expectations on its second-quarter sales and updated its full-year profit forecast.
Rather, a luxury brand Burberry ( LON: ) issued a profit warning, while other UK retailers pointed to continued low consumer confidence, particularly around higher discretionary spending.
Reuters contributed to this article.
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