- Howard Archer, chief UK and European economist at IHS Global Insight
British retail sales unexpectedly rose in May, driven by sales of food and gasoline, as spending on clothing dropped. According to the Office for National Statistics, the volumes of sales climbed 0.2% in the reported month from April, whereas economists had expected a 0.1% decline. Sales soared 4.6% on the year, marking a 26th month of consecutive annual growth, the longest streak since May 2008. Retail sales, which account for 5.6% of Britain's economic output, rose 0.6% in the three months through May from the previous three-month period. Food sales added 0.6% from the previous month, while fuel rose 0.3%. However, sales of clothing and footwear fell 1.6%, declining from a pickup in April when sales jumped 2.9% due to warm weather.
Near-zero inflation and a strengthening labour market are fostering consumer spending as trade continues to act as a drag on economic growth. Average store prices continued to fall for the 11th straight month, declining 2.7% in May this year compared with last year, with the largest contribution coming from petrol stores. In the minutes of its June meeting published earlier in the week, the Monetary Policy Committee said factors limiting price growth were "likely to dissipate fairly shortly," and could strengthen "notably" by the end of the year.
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