-Daniel Vernazza, UniCredit
British retail sales dropped markedly in June after two consecutive months of growth, official figures from the Office for National Statistics (ONS) showed on Thursday. The volume of retail sales declined 0.9% month-over-month on a seasonally adjusted basis in June after rising 0.9% in May, while market analysts anticipated a decrease of 0.4%. Compared with a year earlier, last month's sales grew 4.3%, following May's downwardly revised reading of 5.7% and falling behind analysts' expectations of a 5.0% rise. The June deceleration was mainly driven by lower sales of clothing and footwear which dropped 1.8% on a monthly basis and 6.1% on an annual basis. The adverse weather was seen as the main contributor to the following fall, as most of the data was collected before the June 23 EU referendum. Excluding auto fuel, retail sales declined 0.9% moth-over-month, although climbed 3.9% year-over-year in the reported month.
Separate data from the ONS showed that UK public sector net borrowing dropped to 7.31 billion pounds in June from the previous month's upwardly revised reading of 9.41 billion, whereas economists predicted an increase to 9.20 billion.
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