According to the Office for National Statistics (ONS), UK retail sales grew by 5.9% in July this year compared with July 2015. This came as a surprise to many pundits who expected the the Brexit vote in the referendum on June 23rd to dampen consumer confidence.
It would seem the boost was in part thanks to warmer weather than last year and the weaker pound, which has likely encouraged tourist spending. Month on month sales were up 1.4% between June and July.
Joe Grice of the ONS says: “Better weather this year could be a major factor, with sales of clothing and footwear doing particularly well.” One notable sales increase came in sales of watches and jewellery which jumped 16.6% in July compared with last year.
Economist Samuel Tombs at Pantheon Macroeconomics is less than enthusiastic about the numbers saying that “consumers’ blissful ignorance won’t last long”.
He says: “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. The real test for consumer spending lies in 2017 when jobs cuts will kick in and inflation will erode spending power.”
We shall see.