Soaring temperatures put shoppers in mood with sales surge

Soaring temperatures boosted sales of food, alcohol and clothing in July to fuel hopes about the recovery in consumer spending

Summer shoppers
Summer shoppers

Retail sales rose 1.1% in July on a month earlier and were up 3% on July 2012 – the steepest rise for two and a half years – driven by soaring sales at supermarkets and department stores.

The heatwave saw shoppers stock up on barbecue goods to drive food sales volumes 2.1% higher on a year earlier, the sharpest rise in more than two years, figures from the Office for National Statistics (ONS) showed.

The 1.1% gain was well ahead of economists’ average hopes for a 0.7% month-on-month increase and will add to hopes that overall third-quarter GDP growth can exceed the 0.6% gain seen in the April to June quarter.

It was the third consecutive rise in month-on-month retail sales, following June’s 0.2% increase.

The figures suggest a likely boost from the birth of Prince George and British sporting success, including Andy Murray’s Wimbledon victory, Lions rugby, and Ashes cricket.

Department stores saw July sales surge 3.1% on a year earlier, while sales of textiles, clothing and footwear were up 1.4%.

Supermarkets also reported higher sales of garden furniture, although household goods stores were a rare weak spot, with sales falling 2.3% on a year earlier.

Month on month, there were dips in sales volumes across department stores and textile, clothing and footwear retailers, but supermarket sales grew 2.5%.

A third consecutive month of rising retail sales is the latest sign that Britain’s recovery is gathering pace, following robust data from the services sector as well as upbeat figures from manufacturing and construction.

Martin Beck, UK economist at Capital Economics, said: “Shoppers were lured outside by the sunshine. With consumer confidence on the rise and continued growth in employment, the retail sector looks set fair for the third quarter.”

James Knightley, economist at ING Bank, said the data suggests a “decent increase” in GDP in the third quarter.

But he added that, with the economy also creating jobs, interest rate hikes are likely to come much sooner than late 2016 as implied by the Bank.

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