British retail sales edged up unexpectedly in July, helped by the strongest growth in online spending in three years, suggesting consumers continued to support the economy ahead of the 31 October Brexit deadline.
Monthly retail sales volumes rose 0.2%, the Office for National Statistics said on Thursday, compared with a median forecast for a 0.2% decline in a Reuters poll of economists and following a 0.9% surge in June.
Compared with July 2018, sales were up by 3.3%, slowing from robust growth of 3.8% in June. The Reuters poll had pointed to annual sales growth of 2.6%.
The Brexit Factor
Consumers have so far largely taken Brexit in their stride, helped by modest inflation and wages growing at their fastest rate in 11 years.
That has aided the world's fifth-biggest economy at a time when many companies have been cutting back on investment because of escalating uncertainty about Brexit.
The figures contrasted with a British Retail Consortium survey that showed spending fell in the year to July at the fastest pace on record for that month.
The ONS said retail sales grew 0.5% in the three months to July, the smallest increase this year and reflecting a drop in sales volumes in May.
Online Sales
"Although still declining across the quarter, there was an increase in sales for department stores in July for the first time this year," ONS statistician Rhian Murphy said.
"Strong online sales growth on the month was driven by promotions."
Online sales jumped 6.9% on the month, their biggest rise in volume terms since May 2016.
Amazon held its annual "Prime Day" sales promotion last month, a major driver of sales for the company.
Household Goods
However, household goods stores reported their biggest monthly drop in sales in two years, down 5.4%, with anecdotal evidence that warm weather had kept shoppers out of furniture and lighting stores.
Stable inflation, the strongest rise in wages since 2008 and some of the lowest unemployment rates since the mid-1970s have continued to boost household incomes, although after inflation wages are still below their peak before the financial crisis.
But there have been signs that consumers could turn more cautious as Britain's political crisis drags on.
The amount households are saving relative to their income is not far off record low levels.
News from retailers has been mixed of late. Fashion chain Next shrugged off Britain's retail gloom on Wednesday and has also reported a surprise rise in full-price sales.
But baby products retailer Mothercare blamed an uncertain and volatile home market coupled with fragile consumer confidence as reasons why it will not report a rise in annual profit.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
