Dip of 0.4 per cent in UK retail sales

UK retail sales fell by 0.4 per cent in June, according to figures released today by the Office for National Statistics.

However, sales were expected to fall 0.1 per cent further and were up by 4.4 per cent on the previous year. It is the largest fall in retail sales since the beginning of the year.

Sales were boosted by a rise in the purchase of household goods, such as furniture and appliances, and the decision by the Bank of England to cut interest rates by a quarter per cent to 3.5 per cent.

Sales of food and clothing dipped, the ONS said, but temperatures of more than 30C helped sales of goods such as electric fans and paddling pools.

Over the three-month period from May to July, retail sales rose 1.4 per cent compared with the previous three months, and increased 4.6 percent from the same period a year ago.

A spokesman for the ONS stressed that the three-month growth figures were a better indicator of trends and added, "I wouldn't read too much into the fall at all."

Retail sales surged by 1.9 per cent in June and analysts had expected a substantial drop back in July.

However, concerns have been raised in recent weeks about the escalating level of consumer debt and economists are warning that any further rate cut could pose problems.

The cost of borrowing is currently at its lowest level for 48 years.

Britain's economy expanded in the first half of this year as countries such as Germany, Italy and the Netherlands slipped into recession.

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