- Howard Archer from IHS Economics
British retail sales, which account for 5.6% of the UK economy, rose in August, driven by sales of clothing, the Office for National Statistics reported. Retail sales volumes edged up 0.2% on the month to show an annual growth of 3.7%. Economists had expected retail sales to climb 0.2% and be up 3.8% compared with August last year. Clothing and footwear jumped 2.3% in August from July, the ONS said. The rise helped to offset drops at department stores and household-goods retailers. Food sales fell 0.9%. Core retail sales, which exclude auto fuel, increased a mere 0.1%. According to the Confederation of British Industries, retail sales picked up pace in August. The survey showed sales were supported by clothing and grocers' sales, following two months of stagnation, adding that sales volumes were expected to increase further in September.
Benign inflation and the strongest wage growth in more than six years put money in the pockets of consumers and helping them support the UK economy. Bank of England Governor Mark Carney told lawmakers that interest rates may need to rise from a record low in the new year if the economy continues to improve. Economists are still generally optimistic about the economy, as they forecast households are likely to feel wealthier and increase spending throughout the second half of the year.
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