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%.
