UK retail sales growth slowed sharply last month

The BRC said the weak spending growth partly reflected a supermarket price war, which contributed to a 1.8 per cent fall in high street prices last month, the biggest since at least 2006

British retail sales growth slowed in June to one of its weakest rates in three years, possibly in response to fears of higher interest rates, industry figures showed on Tuesday, adding to recent lacklustre economic data.

The British Retail Consortium said total retail spending in June was just 0.6 per cent higher than a year before, the lowest growth rate since May 2011 if annual volatility caused by the timing of Easter is excluded.

Consumer spending has been a major driver of Britains unexpectedly strong economic recovery over the past year, but in May the Bank of England said it expected the rate of growth to fall slightly in the second half of 2014.

Industrial output and the construction sector were weak in May, and services activity growth slowed to a four-month low in June.

The BRC said second-quarter sales growth was robust overall, rising by 2.6 per cent, the fastest growth rate for a calendar quarter since the third quarter of last year.

But the figures were flattered by Easter falling in the second quarter this year and the first quarter in 2013, and spending growth slowed towards the end of the quarter, after chalking up annual growth of 2 per cent in May.

June saw increased speculation that the Bank of England would raise interest rates from their record low 0.5 per cent later this year, though the BoE has stressed that any increases will be gradual and will be to below pre-crisis levels.

The BRC said the weak spending growth partly reflected a supermarket price war, which contributed to a 1.8 per cent fall in high street prices last month, the biggest since at least 2006.

Consumers continue to benefit from competitive pricing, which may be the cause of softer like-for-like sales in June, BRC director-general Helen Dickinson said.

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UK retail sales growth slowed sharply last month