Falling prices failed to tempt consumers to part with their money last month as shops and online traders reported a surprise drop in business.
The Office for National Statistics said the volume of retail sales in June fell 0.2% compared with May, confounding City expectations of a 0.4% post-election boost to spending.
The small decrease in sales came despite average store prices falling by almost 3% on a year earlier, representing the 12th successive month of deflation in the retail sector.
Falls in sales were reported by petrol stations, food stores and outlets selling household goods, the ONS said.
Over the three months to June – a better guide to the underlying trend than one month’s figures – retail sales volumes were up 0.7% on the quarter ending in March.
The ONS said the quarterly measure of retail activity had shown growth for 28 months in a row – the longest period of sustained increase since consistent records began in June 1996.
“UK retail sales for June are surprisingly soft,” said James Knightley of ING bank. “Overall, it isn’t great news, but we feel that the trend for consumer spending remains strong. Indeed, retail sales are still growing 4% year on year and with consumer confidence at 15-year highs, real wages rising by around 3% year on year and employment continuing to move higher, the outlook remains positive for spending. We still look for a February Bank of England rate hike.”
