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Hot weather boosts retail sales
SOARING temperatures boosted sales of food, alcohol and clothing in July to fuel hopes over the recovery in consumer spending.
Retail sales rose 1.1 per cent in July on a month earlier and were up 3 per cent on July 2012 - the steepest rise for two and a half years - driven by soaring sales at supermarkets and department stores.
The heatwave saw shoppers stock up on barbecue goods to drive food sales volumes 2.1 per cent higher on a year earlier, the sharpest rise in more than two years, figures from the Office for National Statistics (ONS) showed.
The 1.1 per cent gain was well ahead of economists average hopes for a 0.7 per cent month-on-month increase and will add to hopes that overall third-quarter GDP growth can exceed the 0.6 per cent gain seen in the April to June quarter.
It was the third consecutive rise in month-on-month retail sales, following Junes 0.2 per cent increase.
The figures suggest a likely boost from the birth of Prince George and British sporting success, including Andy Murray's Wimbledon victory, Lions rugby, and Ashes cricket.
Department stores saw July sales surge 3.1 per cent on a year earlier, while sales of textiles, clothing and footwear were up 1.4 per cent.
Supermarkets also reported higher sales of garden furniture, although household goods stores were a rare weak spot, with sales falling 2.3 per cent on a year earlier.
Month on month, there were dips in sales volumes across department stores and textile, clothing and footwear retailers, but supermarket sales grew 2.5 per cent.
A third consecutive month of rising retail sales is the latest sign that Britains recovery is gathering pace, following robust data from the services sector as well as upbeat figures from manufacturing and construction.
The Bank of England recently introduced a radical new policy to bolster consumer and business spending, saying interest rates will not rise from their record 0.5 per cent low until unemployment falls to 7 per cent from 7.8 per cent.
Martin Beck, UK economist at Capital Economics, said shoppers were lured outside by the sunshine.
He said: With consumer confidence on the rise and continued growth in employment, the retail sector looks set fair for the third quarter, even as the boost from the weather fades.
Bill MacLeod, partner and retail expert at PwC in Newcastle, said:
"Sunshine, confident statements from the new Governor of the Bank of England plus a slight lift in the housing market, have done wonders for consumer confidence. The apparel and general retail merchandise sector seem to have benefitted, with encouragingly strong sales for the majority across both physical stores and online, the latter still leading.
"Many retailers are now coming to 'the inflexion point' of 20 per cent non-food sales online or 10 per cent food sales online which means the business model needs to change.
"Shopping anytime, anywhere, through any channel - 'total retail' - requires a long hard look at the property portfolio, supply chain and organisational design in order to deliver increased customer focus and increased profit too. Retailers addressing the challenge now are realising the benefits."
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