Retail sales fall for June but by less than expected

Retail sales fell last month as rising interest rates bit into consumers’ budgets, but the rate of decline was less than forecast in a reality check for hopes stoked this week that inflation has started to plunge.

Official numbers for June showed a 1% year-on-year decline in retail sales. lower than the 1.5% forecast, but also down from the 2.3% seen for the previous month. Core retail sales, which exclude fuel and car sales, dropped 0.9%, lower than the 1.6% City experts predicted and a smaller drop than 1.9% in May.

The pattern came after official inflation data fell more than expected this week – with the consumer price index for June down to 7.9%, the first bigger-than-expected decline since the Bank of England started raising interest rates in December 2021.

Since then, there have been 13 consecutive hikes taking the base rate to 5%. It is expected to go up again in August, either bu a quarter point to 5.25% or a half point to 5.50%.