U.K. retail sales likely to have eased in July, private consumption growth to be subdued in H2 2018

After U.K. retail sales rose strongly by over 2 percent in the second quarter, which to some degree was driven by special factors, the retail sales growth in the nation always looked likely to ease in the third quarter, noted Daiwa Capital Market Research in a report.

Today’s BRC Retail Sales Monitor implied that the retail sales growth was indeed lower in July. The headline rate of sales growth dropped from 2.3 percent year-on-year to 1.6 percent year-on-year, while the like-for-like growth fell to 0.5 percent from 1.1 percent on a year-on-year basis. However, both rates were consistent with their 12-month averages.

Delving into details, food sales, which recorded the strongest sales growth for the July month in five years, seem to have been the main driver. Beyond these seasonal factors, the survey highlighted that the operating environment for retailers continued to be challenging. And with fundamentals for solid consumer spending – high levels of confidence, sound rate of real income growth and solid housing market – remaining absent, in spite of the strong labor market, the private consumption growth in the U.K. in the second half of the year is expected to be subdued, added Daiwa Capital Market.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bearish at -56.088, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -9.15998. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex