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UK retail sales unexpectedly fall in July

UK retail sales unexpectedly fell in July as people spent less on groceries and more on going out and as the boost from the Euros faded, according to figures released on Friday by the Office for National Statistics.
Retail sales declined 2.5% on the month versus expectations for a 0.4% increase. Still, they were up 5.8% compared with their pre-pandemic levels in February 2020.

Food store sales were down 1.5% following an increase in June, when sales were boosted by the start of the Euro 2020 football championship. Meanwhile, non-food stores reported a 4.4% drop in sales volumes compared with June.

Jonathan Athow, deputy national statistician at the ONS, said: “Following the Euro 2020-related boost in June, retail sales fell in July to their lowest level since shops re-opened in April, but still remain well above pre-pandemic levels.

“Food sales fell back as further lifting of hospitality restrictions meant consumers had more opportunities to spend outside retail.

“Heavy rainfall at the start of July hit fuel sales, which dipped for the first time since February.”

ING economist James Smith said: “We’re not convinced July’s fall in UK retail sales can be put down to the rapid spread of the Delta variant. Social spending is a better place to look for that impact, and so far it appears smaller than might have been expected. Instead, retail’s latest fall may be down to a rebalancing towards services after lockdowns.”

Separate data released by the ONS showed that government borrowing was £10.4bn in July, down by £10.1bn compared with July last year and below consensus expectations of £11.9bn. It was the second-highest figure for July since records began.

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