LONDON: The Office for National Statistics (ONS) said retail sales fell 0.2 per cent between May and June, confounding forecasts for a rise of 0.4 per cent, while the annual rate of growth slowed to 4 per cent.
It was the slowest annual growth since last September and came despite another fall in prices and with consumers being boosted by wages rising above inflation.
The ONS said sales falls were seen across petrol stations, food stores and shops selling household goods.
But sales by volume were still up by 0.7 per cent overall quarter-on-quarter in the three months to the end of June.
Economists said June’s drop was a surprise, but believe robust underlying consumer spending should help shore up growth in the wider economy.
Paul Hollingsworth at Capital Economics said: “The weaker tone of June’s retail sales figures does not alter the big picture that the consumer recovery remains in full swing.
And with the UK set to experience another period of ‘good’ deflation, the prospects for the second half of this year are bright.”
He believes that inflation – currently at zero – could potentially drop into negative territory again for a short while, spurred on by lower oil prices and an upcoming cut in British Gas tariff prices, which would provide another boost to household spending power.
June’s disappointment came after sales rose 0.7 per cent in April and 0.3 per cent in May.
The ONS said the amount spent in shops fell 0.1 per cent between May and June, but was 0.9 per cent higher year-on-year.
A 10 per cent plunge in petrol station prices drove overall prices down 2.9 per cent on average last month compared with a year earlier, according to the ONS.
The ONS data also showed online retail sales rose 1.4 per cent by value between May and June, accounting for 12.4 per cent of all sales.
Yearon-year, online sales rose 11.4 per cent in June.
The figures come ahead of next week’s estimate for overall UK growth in the second quarter, with economists looking for a pick-up on the 0.4 per cent rise in gross domestic product in the first three months of this year.
