According to the Office for National Statistics (ONS), contrary to economists forecasting a -0.4% drop, retail sales in the UK fell by more than expected in June, shedding -1.2%, following a +2.9% jump in May. Markets were largely muted following the release; sterling (GBP) is down -0.1% versus the US dollar (USD) as of writing.

The ONS said, ‘retailers suggested election uncertainty, poor weather, and low footfall affected sales’.

Aside from automotive fuel sales, which gained +2.2%, sales volumes fell across all key categories in June. Department store sales fared poorly, dropping -3.4%, followed by household goods stores, down -2.1% on the month.

Excluding fuel, June’s month-on-month retail sales also fell more than economists anticipated, dropping -1.5% from a +2.9% increase in May.

Erin Brookes, Managing Director from Alvarez & Marsal, commented: ‘Unfortunately, June has been a washout for retail sales, with retailers yet to sustain two consecutive months of sales growth this year, with another slowdown after an uptick in May’.

The latest retail sales print follows the Gfk UK consumer confidence survey, released overnight. The survey showed confidence improved marginally for a fourth successive month, though it was slightly higher than forecasted. Joe Staton, GfK’s Client Strategy Director, noted that people are cautious and waiting to see how the Labour government will influence the economy and their finances.

The retail sales release also follows the June Consumer Price Index (CPI) released on Wednesday, showing year-on-year CPI inflation held steady at +2.0% (above forecasts), and services inflation remained sticky. We also had the May employment numbers out yesterday, revealing that UK unemployment remains at its highest since September 2021. The report revealed that although wage growth cooled, pay remains elevated and is a concern for the Bank of England.

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