"One swallow does not make a summer" - how analysts reacted to the ONS retail figures

Helen Cahill
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The retail sales figures were better than expected (Source: Getty)

The pound has hit a two-week high against the dollar after retail sales figures received an unexpected Brexit boost.

The retail industry has earned a "gold medal" for its performance in July, according to Ian Gilmartin, Barclays' head of retail, as retailers "gained a boost from brighter weather" - but analysts haven't been all positive; many have welcomed Britain's summer splurge with a heavy dose of scepticism.

Paul Morales, retail specialist at Lloyds Bank Commercial Banking, said:

This is the first full month of sales figures following the referendum and today’s evidence suggests the result has done little to dampen shoppers’ appetite to spend.

But sales were also boosted by some widespread discounting, and it is unclear how sustainable continued price cuts are if consumer activity does begin to slow.

Department stores were the "star performers" according to Martin Beck, economic advisor to EY's ITEM Club.

"However, one swallow does not make a summer and Brexit-related uncertainty still has the potential to hit the consumer sector," Beck said. "Although rising inflation on the back of sterling's fall will squeeze shopper's purchasing power, action by the Bank of England to cut borrowing costs and aid the supply of credit will provide some offset."

Read more: Sterling surges as shoppers splurge in Brexit spending spree

Spending isn't safe, according to Anna Lead, CBI head of economic analysis, who said consumers "remained resilient" after the EU referendum, but warned that "we can expect weaker spending" in the coming months.

"The recent fall in the pound will push up the cost of everyday purchases over the coming year, which will eat into households' spending power," Lead said.

Dennis de Jong, managing director of UFX.com, said: "The high street certainly hasn’t taken as big a hit as many had predicted in the immediate aftermath of Brexit, but retailers will still have concerns about what lies ahead over the next few months.

"Nonetheless, the government won’t be celebrating just yet as they will need to see more evidence that consumers are continuing to reach for their wallets as the effects of Brexit become clearer."

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