"While inflation is falling to plan, the hoped-for increase in spending is clearly not materializing"
- Markit
Retail sales edged up slightly by just 0.1% in June from the previous month, with one of the main reason for this being lower clothing and footwear prices, said the Office for National Statistics. The figure was against economists' expectations, who forecasted a 0.6% rise.
"Many forecasters, including the Bank of England, had been relying on consumer spending to rise this year as inflation falls. However, while inflation is falling to plan, the hoped-for increase in spending is clearly not materializing," said Chris Williamson, Economist at Markit.
"With unemployment still at 8.1%, the economic outlook darkening, consumer confidence continuing to run at low levels and incomes still being squeezed as inflation runs ahead of pay growth, it is easy to see why spending might continue to fall in coming months."
© Dukascopy Bank SA