Brits spent less money in shops in June as retail sales struggle to gain momentum, a new set of data shows.
The amount of money spent dropped 0.1 per cent from May to June, according to figures released by the Office for National Statistics yesterday.
In the three months to the end of June, the amount spent is up only 1.3 per cent compared with the previous year.
The volume of goods purchased climbed 4.3 per cent annually. The reason why spending has grown relatively slowly, while the amount of goods purchased has increased at a quicker rate is due to falling prices.
Average store prices fell 2.9 per cent in June compared with the same month in 2014, dragged down mostly by a 10 per cent drop in prices at petrol stations. It was the 12th consecutive month of year-on-year price decreases.
The fact that money sales have dropped is a sign that demand from consumers is not as strong as it could be, said economist Ross Walker from RBS.
“The amount of money actually being spent, rather than an estimate of the quantity of goods being purchased, is the better gauge of demand and future inflation pressures,” Walker said.
“The trends in sales values growth over the past year are downward – which sits somewhat uneasily with much of the bullish commentary around the UK economy and consumer.”
“In the light of these statistics, it is increasingly hard to fathom why so many commentators and market participants seem to believe the UK consumer is firing on all cylinders.”
However, Walker said that retail sales volumes, not values, correlate closely with the retail services output data that are a part of the UK’s GDP.
This means the weak spending does not pose an obvious risk the economic growth from April to June.
The first estimate of economic growth for that period will be released on Tuesday.