Retail sales rise in June, helped by department store discounts

LONDON Thu Jul 18, 2013 6:45pm BST

Customers look at a food display in the food hall at a Marks & Spencer shop in central London May 21, 2013. REUTERS/Suzanne Plunkett

Customers look at a food display in the food hall at a Marks & Spencer shop in central London May 21, 2013.

Credit: Reuters/Suzanne Plunkett

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LONDON (Reuters) - Retail sales rose in June, the latest sign of a recovery in the economy, helped by an unusually high level of discount sales at department stores.

Retail sales volumes increased 0.2 percent on the month to show growth of 2.2 percent on the year, the Office for National Statistics said on Thursday.

Economists had expected retail sales to rise 0.2 percent on the month, slowing after a very strong May when they jumped 2.1 percent, and for sales to be 1.7 percent higher on the year.

Sales at non-specialised stores, including department stores, grew at their strongest rate since March 2012, jumping 3 percent on the month, helped by clearance sales and promotions.

Consumer spending remains under pressure from inflation which is outstripping wage growth. Data earlier this week showed inflation rose to 2.9 percent in June, while wage growth, excluding bonuses, rose 1 percent in the three months to May 30.

New Bank of England Governor Mark Carney is discussing with his fellow policymakers ways to reassure households, as well as businesses and financial markets, that interest rates will not be rising any time soon, potentially encouraging more spending.

In the second quarter, retail sales were 0.9 percent higher than in the first three months of the year, contributing 0.1 percentage points of growth to gross domestic product in the April-June period, ONS officials said.

The retail sector accounts for just under 6 percent of the British economy.

Thursday's data echoes other readings of the economy which have suggested Britain's recovery picked up a bit of pace in the second quarter after growing 0.3 percent between January and March.

The British Retail Consortium said last week the total value of retail sales rose by an annual 2.9 percent in June, helped by warmer weather than in the same month in 2012.

The ONS measure of sales by value rose 3.8 percent in annual terms, the strongest since March 2012. The gain was boosted by the biggest rise in overall retail prices since April 2012 at 1.7 percent, as measured by the ONS deflator gauge of inflation.

(Reporting by William Schomberg and David Milliken)

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