World Cup hits retail spending
July 26, 2002
Data from the Office for National Statistics (ONS) showed retail sales volumes fell 0.7 per cent in June, sharper than economists' expectations and the weakest figure for more than two years.
The month-on-month slide follows a 0.5 per cent fall in May, and means retail sales in June were up just 4.6 per cent on the same month last year.
It was the first time sales have fallen in two
consecutive months since September/October 1998.
The ONS said anecdotal evidence showed some retailers reported the Jubilee Bank Holiday had a downward effect on sales, particularly for small retailers.
There was also anecdotal evidence from some retailers that the World Cup had an effect, with sales down on key match days.
During the month, food stores showed a 0.3 per cent decline in sales, while non-food shops were down one per cent.
However, clothes and shoe shops were the exception, rising two per cent during the month.
The sales fall will reinforce expectations in the City that the Bank of England will hold off raising interest rates.
Low inflation and the recent slides in stock market values mean economists are expecting rates to stay at four per cent for the coming months.
Ross Walker, economist at Royal Bank of Scotland, said: "It reinforces the argument for not raising rates."
He said the sales fall was probably due to the Jubilee and World Cup effect, adding: "I don't think there is any reason to expect a collapse in consumer spending."
Philip Shaw, economist at Investec, said he was not concerned by the drop.
He said: "I think there was always going to be lower sales volumes in June, following poor weather in the first part of the month, the bank holiday and the football."
He said the figures would not have a great impact on the rate decision.
"The Bank of England was never going to raise rates with inflation at 1.5 per cent and an uncertain economic picture."
He said he thought rates would stay at four per
cent for the foreseeable future.