U.K. Retail Sales Fall 3.9%, As Inflation Saps Consumers

Daily Forex Fundamentals | Written by DailyFX | Jul 24 08 09:08 GMT |

U.K. retail sales fell 3.9% in June from a record high 3.6% the month prior, the most since at least 1986. The decline was led by a 6.9% drop in apparel purchases as many Britons started buying seasonal items in May due to abnormally warm weather. Food sales also declined 3.6% as costs for basic staples like rice remains at record levels. Inflation rising to 3.8% has sapped consumer purchasing power, and breached the BoE’s 3% threshold. However, the central bank left interest rates unchanged due to the weakening domestic demand and the biggest housing slump in at least 30 years. continues to weigh on the U.K. economy, with growth in the second quarter expected to have slowed to 1.6% from 2.3% as it inches closer to a recession. The BoE recent vote of 7-1-1 at their last policy meeting with Tim Besley voting for a rate hike and David Blanchflower a rate cut demonstrates the lack of direction for the MPC. Blanchflower called for immediate action from his fellow members as the country heads towards a recession. However, as long as inflation concerns remain the BoE may leave rates unchanged for the remainder of the year. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.