Business

UK retail sales shrug off Brexit vote

Shoppers Image copyright Reuters

UK retail sales were stronger than expected in August, suggesting consumer confidence has held up in the wake of the Brexit vote.

Sales volumes fell by just 0.2% last month, the Office for National Statistics said, while sales were up 6.2% from August last year

The ONS said the underlying pattern for the retail sector was "solid growth".

"Overall the figures do not suggest any major fall in post-referendum consumer confidence," it said.

The sales increase for July was also revised higher from 1.4% to 1.9% - the best performance for the month in 14 years.

ING economist James Knightley said the figures offered further evidence that the UK was weathering the short-term effects of the Brexit vote well.

"Sterling's fall is likely to have boosted sales of high-end items by foreign tourists as watches and fashions become relatively cheaper for them when bought in the UK versus elsewhere," he added.

However, Samuel Tombs at Pantheon Macroeconomics, said the figures had to be treated with some scepticism as surveys from the British Retail Consortium, BDO and Visa all pointed to a much bigger fall in sales volumes.

"The chances the official data are revised down therefore seem high," he said.

'Headwinds'

Paul Hollingsworth at Capital Economics said some slowdown in the pace of spending growth was likely.

"There are likely to be a number of headwinds, such as slower growth in employment and real earnings and lower confidence," he said.

The ONS said that the biggest contribution to the fall in sales last month came from non-food stores.

Sales of more expensive household goods such as electrical appliances and hardware fell year-on-year for the first time since May 2014.

The John Lewis Partnership, which owns the UK's biggest department store chain, said on Thursday that half-year profits fell almost 15% to £81.9m.

Image copyright PA

Clothing retailer Next also warned on Thursday that recent trading had been "challenging and volatile" as it reported a 0.7% fall in sales at its shops for the six months to July.

Chief executive Lord Wolfson said: "It has been a challenging year so far, with economic and cyclical factors working against us, and it looks set to remain that way until mid-October at the earliest."

The September heatwave has done little to help clothing retailers, he added: "Consumers are only buying clothes when they need to. In this weather, no one's buying winter clothes."

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