U.K. Retail Sales Unexpectedly Fall In August, Pound Widens Losses
U.K. retail sales unexpectedly dropped the most in 10 months in August as demand for food slumped from its sharp advance in July.
Retail sales with auto fuel for the month of August showed 0.9% fall, compared to both prior and expected readings of 1.1% and 0.4% respectively, where the annual reading edged up 2.1% from a prior of 3.0%.
The drop is largely attributable to the 2.7% decrease in food, falling from the biggest gain since April 2011 recorded in July.
The reading excluding auto fuel also plummeted 1.0% from a revised of 1.2% while annual reading rose 2.3%, after the prior reading was revised up from 3.1% to 3.2%.
Following the release of the retail sales figures, the pound widened its losses against the U.S. dollar to fall to a low of 1.6077 from a high of 1.6150.
The report may lower some of the optimism regarding the British economy as the most recent data has pointed that recovery is gaining traction.
It seems that retail sales did not benefit from the ease in inflation and improvement in unemployment.
CPI for the year ended August dropped to 2.7%, the least in three months, from 2.8% in July.
On the other hand, ILO unemployment for the three months ended July slipped to 7.7% from 7.8%, recording a drop of 24,000 to 2.49 million, the lowest since September-November 2012 period, while jobless claims for the month of August showed a drop of 32,600 to 1.4 million, the biggest two-month decline since 1997.
Gross domestic product figures showed that Britain grew 0.7% in the quarter through June, following a rise of 0.3% in the first quarter.
Unanimously, the BOE decided this month to hold both borrowing cost at its record low of 0.50 percent and amount of asset purchases at 375 billion pounds.
Yesterday, the BOE revised up its growth forecast for the third quarter to 0.7 percent from 0.5 percent, estimated in August’s inflation report.
The progress in second-quarter figures suggest that consumer spending is strengthening while recent economic reports “tentatively suggested” growth would remain robust in the final quarter of this year, the BOE added.