U.K. Retail Sales Unexpectedly Rise in May on Food and FuelAndrew Atkinson
U.K. retail sales, unexpectedly picked up in May, led by sales of food and gasoline, as spending on clothing declined.
The volume of sales rose 0.2 percent from April, the Office for National Statistics in London said on Thursday. Economists in a Bloomberg survey forecast a 0.1 percent decline. Sales increased 4.6 percent on the year. That marks a 26th month of consecutive annual growth, the longest stretch since May 2008.
Near-zero inflation and an improving labor market are supporting consumer spending as trade continues to act as a drag on economic growth. Investors brought forward bets on when the Bank of England will end record-low borrowing costs Wednesday after officials warned that the restraints on the economy and inflation are fading.
The pound rose after the report and traded at $1.5920 at 9:31 a.m. London time, up 0.6 percent from yesterday.
Retail sales, which account for 5.6 percent of gross domestic product, rose 0.6 percent in the three months through May from the previous three months. Were retail sales to fall about 1.1 percent in June, that would leave overall retail sales unchanged in the second quarter from the first, the ONS said.
Food sales rose 0.6 percent from the previous month, while fuel increased 0.3 percent. Sales of clothing and footwear dropped 1.6 percent, declining from a pickup in April when sales increased 2.9 percent due to warm weather.
The increase in retail sales followed a gain of 0.9 percent in April, which was revised down from a previously estimated 1.2 percent. Excluding auto fuel, sales rose 0.2 percent on the month and 4.4 percent on the year.
Prices as measured by the retail-sales deflator fell an annual 2.7 percent in May compared with a 3.2 percent drop in April. Fuel costs declined 10.2 percent while food fell 1.6 percent.
In the minutes of its June meeting published Wednesday, the Monetary Policy Committee said factors constraining price growth were “likely to dissipate fairly shortly,” and could strengthen “notably” by year-end. Separate data showed pay growth accelerated to the fastest in almost four years.
The inflation rate crept back above zero in May, and the MPC forecasts it will pick up at the end of the year and move toward the goal in 2016. Money markets are pricing in a quarter-point interest-rate increase by June, two months earlier than projected on Tuesday.