UK retail sales rise over 1 percent in July 2016 as shoppers dismiss Brexit gloom

Thus, it surpassed the 0.2% increase predicted by economists in a Reuters poll but echoed industry reports of solid growth in consumer spending in July 2016. Still, the economists were quick to warn that the prospect of job cuts and of rising prices on the high street could see retailers business shrink.

The news of rising retail sales follows recent jobs figures suggesting that while business sentiment has been hit, employers are not making any sudden decisions to lay off staff. The number of people claiming unemployment benefit dropped by 8,600 in July 2016, surprising economists who were expecting a rise of 9,500.

According to the ONS, there were signs that the fall in the pound since the referendum, which has made holidaying in the UK cheaper for overseas visitors, had attracted tourists on shopping sprees for luxury goods. Sales of watches and jewellery were up 16.6% on the year.

Joe Grice, the chief economic adviser at the ONS, said: “These are strong numbers showing a pronounced increase in sales compared with last July. Better weather this year could be a major factor with sales of clothing and footwear doing particularly well. There is also anecdotal evidence from respondents suggesting the weaker pound has encouraged overseas visitors to spend. Department stores and specialist retailers like jewellers are among those reporting a good month.”, the source cites.

Retail sales volumes were up 5.9% on the same period of 2015, as all sectors recorded growth with the main contribution coming from non-food stores, the ONS said. Against the backdrop of stiff competition between supermarkets and widespread discounting, average store prices were down 2% on 2015 in July. But the big rise in sales volumes meant there was still a rise in the amount spent – of 3.6% on the year. The amount spent online increased by 16.7% compared with July 2015.

Samuel Tombs, chief UK economist at the consultancy Pantheon Macroeconomics, echoed that. “July’s retail sales figures show that consumers have been protected from the immediate fallout of the Brexit vote, but with firms intending to stop hiring and inflation set to soar, the high street is set for a tough year,” he said. “The real test for consumer spending lies in 2017 when jobs cuts will kick in and inflation will erode spending power.”, the source cites.