UK retail sales volumes rise by 0.1%

UK retail sales volumes rose by 0.1% in July, after falling the previous month, the Office for National Statistics (ONS) has said.

Strong growth in household goods sales helped to offset falls in sales of petrol and clothes.

Compared with a year ago, sales rose by 4.2%. Both the monthly and annual figures were lower than expected.

Average store prices fell by 3% year on year, largely due to an 11% fall in petrol prices.

The price of petrol has fallen sharply on the back of a 50% slump in the oil price over the past 12 months.

The ONS said that the biggest growth in sales were in electrical goods and furniture, both of which were up almost 20% on the month.

Internet sales were up 13%, and accounted for 12.6% of all retail sales.

'Home improvements'

The figures were a little lower than expected, partly because wage rises are rising faster than inflation, so in theory people should have more money to spend.

"With wages increasing, falling fuel prices and with a low interest rate environment, discretionary spending has been boosted by rising real incomes," said Ian Geddes at Deloitte.

"With more money in their pockets, consumers are choosing to spend their money on big ticket items. This is particularly the case for the furniture and household goods subsectors, with consumers making home improvements during the summer months."

David Kern at the British Chambers of Commerce described annual sales growth as "very strong", but said the monthly figure was "a reminder that the recovery is still fragile.

"Given that falling store prices show deflation in the retail sector, we believe that the clamour in some quarters for early interest rate increases is premature".

The consensus for a rise in interest rates is early next year, but some economists have called for a rise this year to give rates time to have an impact on the real economy.