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U.K. Retail Sales Fall as London Olympics Distracts Shoppers

U.K. retail sales fell in August as the Olympics distracted shoppers and internet shopping plunged the most in almost five years.

Sales including auto fuel declined 0.2 percent from July, the Office for National Statistics said today in London. The median forecast of 22 economists in a Bloomberg News survey was for a 0.3 percent decline. Non-store retailing, predominantly online shopping, dropped 6.7 percent. The decline was offset by a surge in sales of sporting goods and items such as bicycles.

The London Olympic Games began on July 27 and ran until Aug. 12, adding to volatility in the consumer data. Household spending has been undermined by the uncertain economic outlook, and the Bank of England said yesterday consumers may remain under pressure as energy prices increase.

“The Games failed to provide an overall boost to retail spending,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. “With consumer confidence still very weak and inflation set to outpace earnings growth for another six months or so, we would not be surprised to see further falls in retail sales in the coming months.”

The pound remained lower against the dollar after the data were released. It traded at $1.6194 as of 10.55 a.m. in London, down 0.2 percent from yesterday.

‘Wiggo’ Boost

Sales in the “other stores” category, which includes sporting goods and games, rose 1.5 percent in August from July and surged 7.9 percent from a year earlier, the statistics office said. That was helped by sales of football shirts and bicycles. Bradley Wiggins, nicknamed ‘Wiggo,’ became the first Briton to win the Tour de France competition this year before winning a gold medal at the Olympics.

The ONS said feedback from stores “suggests that sales were boosted by an increase in sales of football shirts with the start of the new season and the European Championship but also from increased sales as a result of the Olympics.”

In the quarter through August, retails sales including auto fuel rose 0.6 percent from the previous three months, up 2.4 percent from the year-earlier period.

Food sales rose 0.2 percent in August from the previous month. Clothing, textile and footwear sales increased 1.6 percent. Excluding fuel, retail sales fell 0.3 percent in August from July and were up 3.1 percent from the same month a year earlier, today’s report showed.

Inflation

Next Plc (NXT), the U.K.’s second-largest clothing retailer, said Sept. 13 that sales in August and early September were “disappointing.” The Olympics was one of a number of elements that may have contributed to the slowdown as shoppers turned their attention to watching the games, Chief Financial Officer David Keens said.

Today’s report also showed that the annual price deflator stayed at 0.2 percent, which was the lowest since October 2009. The food-price deflator rose to 2 percent from 1.9 percent.

Bank of England policy makers forecast that inflation -- which was at 2.5 percent in August -- will ease toward their 2 percent target over the next year. Still, they said it may cool at a slower pace than previously forecast in the near term after an increase in food and energy costs.

The central bank voted unanimously to keep its target for bond purchases at 375 billion pounds ($607 billion) and the key rate at a record low of 0.5 percent, minutes of the Sept. 5-6 meeting published yesterday showed.

To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net

To contact the editor responsible for this story: Matthew Brockett at mbrockett1@bloomberg.net

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